Job Management Job Costing Overhead Costs
Overhead Costs (continued)
Some companies prefer to setup the labor rates for Installers with the actual pay rate then apply an overhead amount to the actual labor incurred on a Job. This method of applying Overhead to a Job is an option available in SedonaSetup. The Overhead setup allows two different methods of applying Overhead cost to a Job:
Percentage Method - Apply Overhead as a percentage of labor dollars posted to the Job.
Example: The Overhead rate is setup as 200%. When a timesheet is posted for a total of $80.00, an
Overhead cost transaction will be posted at the same time for $160.00.
Flat Rate Method - Apply a fixed dollar amount for each labor unit posted to the job.
Example: The Overhead rate is setup as $30.00. When a timesheet is posted for 8 labor units, an
Overhead cost transaction will be posted at the same time for $240.00.
Overhead may be setup in one of three places in SedonaSetup; Job Type setup, Install Company setup or Job Management Setup Processing. Typically Overhead rates are setup in the Job Management Setup Processing form. If your company will post Overhead expenses to different G/L account based on the Install Company, then the Overhead rates should be setup on each Install Company. If your company will post Overhead expenses to different G/L accounts based on the Job Type, then the Overhead rates will be setup on each individual Job Type setup form.
All Labor and Overhead costs that are posted are purely for Job Costing purposes. The exception to this is entering Labor hours/dollars via Payroll Timesheet entry; these are true Labor costs.
Since your company will be entering actual labor dollars through Payroll Journal Entries, the Labor amounts posted to Jobs through timesheet entry, will need to be journalized out at the end of each month; otherwise your cost of goods sold will be overstated. The same applies if your company is posting Overhead to Jobs; these amounts will need to be journalized out at the end of each month, since the individual elements that make up Overhead are posted to expense accounts from A/P bills.