Avoid Job Costing through the Payroll System in .NET framework

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Avoid Job Costing through the Payroll System
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Some controllers have elaborate cost accounting systems set up that accumulate a variety of costs from many sources, sometimes to be used for activity-based costing and more frequently for job costing One of these costs is labor, which is sometimes accumulated through the payroll system When this is done, employees use lengthy timecards on which they record the time spent on many activities during the day, resulting in vastly longer payroll records than would otherwise be the case This is a problem when the payroll staff is asked to sort through and add up all of the job-costing records, since this process increases the workload of the payroll personnel by an order of magnitude In addition, the payroll staff may be asked to enter the job-costing information that it has compiled into the job-costing database, which is yet another task that gets in the way of processing the payroll The obvious solution is to not allow job costing to be merged into the payroll function, thereby allowing the payroll staff to vastly reduce the amount of work it must complete, as well as shrink the number of opportunities for calculation errors However, this step may meet with opposition from those people who need the job-costing records There are several ways to avoid conflict over the issue One is to analyze who is charging time to various projects or activities and see if the proportions to time charged vary significantly over time; if they do not, there
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Payroll Best Practices / 57
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is no reason to continue tracking job-costing information for hours worked Another possibility is to split the functions so that the payroll staff collects its payroll data independently of the job-costing data collection, which can be handled by someone else Either possibility will keep the job-costing function from interfering with the orderly collection of payroll information
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When processing payroll, it is evident that the labor required to process the payroll for a salaried person is significantly lower than for an hourly employee; there is no change in the payroll data from period to period for a salaried person, whereas the number of hours worked must be recomputed for an hourly employee every time the payroll is processed Therefore, it is reasonable to shift as many employees as possible over to salaried positions from hourly ones in order to reduce the labor of calculating payroll Implementing this best practice can be a significant problem; it is not under the control of the accounting department, since it is up to the managers of other departments to switch people over to salaried positions, so the controller must persuade others to make the concept a reality Another problem is that this best practice is generally opposed by unions, who prefer to give their members the option to earn extra overtime pay Finally, there may be government regulations that prohibit converting employees to salaried positions, with the main determining criterion being that a salaried person must act with minimal supervision This situation will vary by state, depending on local laws Given the number of issues just noted, it may seem impossible to implement this best practice However, it is quite possible in some industries The main factor for success is that the industry have few hourly workers to begin with For example, a company with many highly educated employees or one that performs limited manufacturing, may already have so many salaried employees that it becomes a minor cleanup issue to convert over the few remaining hourly employees to salaried positions
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The most labor-intensive task in the payroll area is calculating hours worked for hourly employees To do so, a payroll clerk must collect all of the employee timecards for the most recently completed payroll period, manually accumulate the hours listed on the cards, and discuss missing or excessive hours with supervisors This is a lengthy process with a high error rate, due to the large percentage of missing start or stop times on timecards Any errors are usually found by employ-
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