When you go to your sales history do you see them as categorized sales? My view looks similar to this, but when I go to see my sales progress the items still come up as Uncategorized 

the only thing that shows up as uncategorized sales is when someone types a price on the keypad, which they are not supposed to do, rather than choosing an item.  all my item sales which all have variants are in the category that the item is in.  all I can say without seeing is make sure that the category is picked on the main item (second row of option in the pic I posted).

I understand conceptually what you are saying, and appreciate your effort. However, I have already done things the way you have suggested. I have had my categories set this way for months now. I believe this may be an application error. 

See above they are definitely within the same product that is in the "Graphic Design" Category, but below the very same item is "Uncategorized" in Sales Tab. This is really messing up my tracking for how the different services I provide are doing independent of one another.

let me tag in someone from Square and see if they have any insight.  your other option is to call into Customer support and see what they say as they can see your account.

https://squareup.com/help/contact

Click "Other"

Click "I don't see my issue"

Click "Call Support"

Write down your Customer Code

Call 1 (855) 700-6000

@katieand or @Sean andy ideas?