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      Direct Labour Cost Rates

      What are Direct Labour Cost Rates and how to set them up?

      When time is entered in Accountability, the value of the time entry is captured using one of 3 different rates ie

      • Billable Rate
      • Indicative Cost Rate
      • Direct Labour Cost Rate

      Various reports and on screen displays present the value of time entries using these rates.

       

      Direct Labour Cost Rates

      Direct Labour Cost Rates are hourly costs rates set at the Employee level to record a labour cost value against a time entry.

      They represent a cost rate derived from the actual employee's employment cost.

      There are variety of methodologies used to calculate Direct Labour Cost rates.

      Generally they are based on the actual employee's total annual employment cost divided by an annual hourly divisor.

      The employee's total annual employment cost  may include employee "on costs" such as employment taxes, and government charges, and even an overhead allowance.

      The annual hourly divisor may take account of leave entitlements and or the employee's chargeable percentage

      Whatever methodology is used, to ensure the consistency and integrity of profitability reporting, it is critical that the same method be used consistently across all employees.

      The Direct Labour cost rates should be routinely updated when employee remuneration levels change.

      The system will record time entries at the Direct Labour Cost rate that was in place at the point of the time entry - referred to in various report options as the "Time Entry Cost Rate".

      The updated or current rate is referred to in the same report options as the "Employee Current Cost Rate".

      The system profitability produces various reports using the Direct Labour Cost rates ie

      • Jobs/Job Reports - Job Profitability Report
      • All reports in the Accounting/General Ledger/General Ledger Reports/Client Profitability Reports menu
      • Client Servicing anCost Summary report in Resource Tracker menu

      Also various Time Reports will also show cost values for time entries based on Direct Labour Cost Rates.

      As this information is highly confidential, these reports can only be accessed, or will only display cost information for users with Unrestricted Access.

       

      How to set up a Direct Labour Cost Rate?

      • Go to Master Files/Employees and click on the relevant Employee.
      • In the field HOURLY COST RATE enter the rate.
      • Click Save and Close.

      Direct Labour Cost Rates can also be imported or updated by using the Import/Update routine.

      • Go to Master Files/Employees and click on the link "Excel".