Material Cost on Service Items

Hi,

We are an Manufacturing and Engineering company, and we are currently using 2.2.11 (haven't yet upgraded, but I'm looking forward to it).

We have created a Service item called "Parts as listed below", and basically we are using this for purchasing and invoicing Non-Stock items that we buy to do a certain job for a customer and then re-invoice out to them. We record the actual parts in the comments and then it appears on the purchase order to the supplier and the invoice to the customer.

On this basis, we have set up our item as a "Service", and have set the accounts to:
Sales Account: Non-Stock Item Sales
C.O.G.S. Account: Non-Stock Item Purchases.

So far so good, but here's the snag - when we do a delivery note on the Sales Order for any "Parts as listed below", it does a GL transaction:
DR Non-Stock Item Purchases
    CR Default Inventory Account

Upon investigation, when we purchase the goods the transaction is
DR Non-Stock Item Purchases
   CR Accounts Payable
So, the items are already sitting in Non-Stock Item Purchases when they are bought. Being a service item, there should be no GL transactions upon raising the delivery note to the customer, I don't think.

To make matters worse, the GL transaction generated by the DN is for the last thing that we purchased as "Parts as listed below". So if we buy a $10 bearing for one customer and then a $10,000 generator for another then if we invoice the bearing it will put through the transaction for $10,000 between Non-Stock Item Purchases and Default Inventory Account, whereas it was really only for $10 (although again, there should have been no transaction at all).

It seems that every time we buy a Service, it records the last value of the goods in the Stock Master Table in the Material Cost field. Of course, we can't see this in Standard Costs because it's a service item, but I can see it using phpMyAdmin.

Can you tell me if I have completely messed up our procedure here, or whether this is actually a bug? I guess the work-around is to create to Items - one solely for purchases and one solely for sales, but I didn't know this before. I do know that we now have several hundred entries to go through and try and reconcile/fix before year end. Shame, poor me. :-(

Thanks for all your help.