After I’ve performed the underlying Labor Burden Calculations, can I get my QuickBooks accounting system to automatically assign fully burdened cost to jobs?
Yes, IF you know how to set up the underlying accounts and Payroll Items, and how to “trick” QuickBooks into performing the cost assignments.
AFTER you have completed your labor burden calculations, you will likely want to see your results reflected in the management accounting reports that you create with QuickBooks. In order to have this information flow into your QuickBooks reports, we have developed a Five Phase procedure for integrating labor burden costs into your job-cost reports. These Five Phases lead you through a step-by-step process of structuring your QuickBooks accounting system to take full advantage of the Labor Burden Calculations.
Phase I – Assign basic payroll and payroll tax costs to jobs
The results: You will see all direct compensation and gross payroll costs assigned to production jobs and to the above “burden” jobs.
Phase II – Determine company-wide labor burden costs
The results: You will see all company-wide labor burden costs segregated and totaled in one place on your management reports. This provides a clearer picture of the company’s total labor burden cost.
Phase III – Determine labor burden costs for individual employees
The results: You will see each employee’s hourly production cost. This provides a much clearer picture of the cost of individual employees. You can also compute what you need to charge per hour for that employee’s time to meet your gross profit targets.
Phase IV – “Trick” QuickBooks into assigning the burden cost to each job
- QuickBooks will calculate the total Labor Burden for each paycheck and allocate that amount across each employee’s jobs.
- The debits and credits will post to the same account, so the impact for the entire company is $0, but your job cost reports will reflect the additional Labor Burden in:
- The Labor Burden account that you established, and in…
- The labor “Service Item” on detailed Item-based job cost reports.
Phase V – QuickBooks quality control, maintenance and impact
The results: Because NJS costs do not accumulate evenly throughout the year (e.g., vacation, insurance, and bonuses) it will take a full year to see how accurate your calculations and allocations are.
Each of these Five Phases are fully detailed as a part of the User’s Guide in our Employee Cost & Pricing Analyzer.