Tracking material assets prior to sale

[John Ruemker]

I'm very new to GnuCash, so apologies if I'm missing some basic 
concepts.  I'm trying to learn the ropes for potential use with a small 
home business.

I know GnuCash doesn't do inventory tracking and that's not really what 
I'm after, but I do want the ability to track materials and unsold 
merchandise as assets until sales are made.  For example, large batches 
of raw materials are purchased in one transaction, kept on hand while 
slowly converted into sellable product, and those products are 
transferred to the customer upon sale.  But I'm having trouble wrapping 
my brain around how this should work.

When the initial purchase of materials is made, that's simple enough: a 
split transaction from Assets:checking (or wherever) to Assets:Materials 
and the rest to Expenses:Taxes and other categories for expenses outside 
of what we're retaining as assets.  Then as materials are converted into 
product, transfer the value from Assets:Materials to 
Assets:Merchandise.  Here, it seems like tracking the value of the 
product in terms of sale price as opposed to material cost would make 
the most sense, but then the transfer from Materials to Merchandise is 
not equal.  Where does the additional amount pull from? So maybe then I 
just leave it as the material cost in the merchandise account?

And then I get ever more lost at the sale.  I would invoice and send it 
to accounts receivable and process the payment to Assets:checking (or 
wherever), but then what do I do with the value in Assets:merchandise?  
Transfer it to an Expenses account?   Is there no way as part of 
invoicing or processing payment to reflect that it covers the transfer 
of a certain amount of assets?

Thanks for helping a n00b.

-John