How to Include Employee Costs in BOMs

May 6, 2016 at 3:02 PMThomas Riemann

Hello everyone. Welcome back to the NumberCruncher Blog. As most of you know, My name is Tom and I am the trainer/support tech here at NumberCruncher. If you need to learn how to do something in the All Order's software, I'm your guy! Remember, if you are struggling with something in the All Order's software, please give us a call @ 866-278-6243. We can set up a training session with you and your company remotely. So make sure you build up those questions and give us a call to set up your session today! That's not what brings me to the blog today. What I would like to talk about today is something that customers ask about all the time, "How do I include employee Costs in BOM's." So sit back and enjoy the read!

Our first step is to create an item that we can put into a BOM. We're going to create a new item called "Labor" (or whatever you would like). This item should either be a non-inventory part, service or other charge group. If you are creating this item in QuickBooks, check the "This service is performed by a Sub-contractor, owner or partner." Next, go to the purchasing tab, enter the cost. The cost should estimate the hourly wages and benefits. Of course, we're going to need to select an income account and an expense account. For income, you can select any of them. For the expense account, create a new account Called "Salaries Applies to Finished Goods". Save and close this item.

Now it is time to include this newly created item in the appropriate Bill of Materials. Go to a finished good item and edit the BOM's. Simply add this item to the component lists. Save and close. Now we can start using this finished good on a work order that will include this new Labor Item's cost.

When you finish a production, the labor cost will be deducted from Salaries Applied to Finished Goods expense and included in the cost of your finished product. Now if the salaries account is greater than the Salaries Applied to Finished Goods, this means that a) you have processed payroll but have not yet finished the product or b) the Cost amount on the item is too low. If the Salaries account is less than the Salaries Applied to Finished Goods this means that either a) you have finished product but have not yet processed payroll or b) the "Cost" amount on the item is too high.

Well, I hope this has cleared any confusion you might have with creating Employee Costs in BOM's. If you still have some question's, place a comment below, and I will answer your question directly. You can also send us an email Support. It's Friday! Take some time to yourself this weekend and get ready for Monday! Enjoy!



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