I've got this thread going on several forums, and I'm starting to realize that I'm confusing myself and others by lumping together two different kinds of "consumables":
1. stuff that doesn't get delivered to the customer, at least not in recognizable form (e.g. sandpaper, glue, lacquer, etc)
2. stuff that does become part of the finished product, albeit highly modified (e.g. wood).
Clearly #1 is an expense item, but how to handle #2 is a bit trickier, especially if it is acquired in bulk rather than as input material dedicated to a specific sold item.
Mind you, if I was actually selling enough pieces to generate enough income to cover the amount of wood I buy in a year, it would be relatively simple. I don't particularly want to turn a huge profit on this hobby (that's why they call it a "hobby"), but I'd at least like to get enough back to cover my bills at the lumberyard without having the IRS climb up my backside.
Problem is, from the IRS's point of view, every penny I receive from selling a piece is "income", but it's not clear that every penny I spend on wood can be considered an "expense", at least not without a bunch of mumbo-jumbo involving "inventory", a term I am extremely loath to apply to the ever-growing pile of wood in my garage.