Labor Expenses

Problem

Employee Payables amount is not including unpaid Labor Hours records.

Diagnosis

We use the Labor Hours amount to calculate labor costs in Goldenseal job cost accounting software. It's a cost that should be figured into management plans, whether or not it is paid.

However for the actual cash expense and accounts payable amounts for labor, we use the Payroll Record. That's because Labor Hours represent the time worked, not the money earned. It doesn't get a reliable money cost until it is processed through payroll.

For example, a salaried employee will be job costed for actual time worked, but the pay is a fixed amount independent of the hours worked.

Solution

If users want to accelerate the expensing of labor in financial reports that are based on cash transaction, they can write payroll in advance of actual payments. That way the expense will show up in payables (until it is actually paid).

Or use a calculator to get total of unpaid labor hours, and use that in financial reports instead of the payroll records figure from our stock layouts.

However, the best way to look at labor (and other costs) is via job costing. That is the most accurate view of labor costs, since it's based on the actual hours worked.

Comments

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Entered 5/1/02 by Dennis. Updated 10/23/2010.