Hourly Technicians

[DAHAPPYAGAIN]

We are currently offsetting the difference between actual hours and flat rate hours to adjusted cost of labor for an hourly tech. Is anyone doing anything differently? Does it work?

[ROLFE]

Give me a bit more information on the way you break this down.

Thanks

Rolfe

[DAHAPPYAGAIN]

The breakdown goes like this:

Technician "A" flags 40 flat rate, billable hours in 1 week but his actual time or clock hours total 45. Because he is hourly he is paid for 45 hours with the difference, in this case 5 hours, being applied to "adjusted cost of sale", at cost, which is directly deducted from the total gross.

My question is where else can that difference be applied that makes sense?

[Doug]

I can't, offhand, think of any better place to put the 5 hours of pay. That 5 hours, after all, is the cost of labor, isn't it ?

I have had a variety of tech spiffs, incentives, bonuses, etc in place for some time and this type of pay has been put to "other wages". However, this has really skewed the numbers. I am restructuring things so that this expense is accounted for in cost-of-labor, where it belongs.

Just my 2 cents....

Cheers,
Doug

[MBailey]

Doug is correct. For accurate accounting purposes, ANY dollars paid to a flat rate hour technician must go into cost of sale. Putting these amounts into "other salaries and wages" only paints a false picture regarding Gross Profit percentage.

[RTS]

Why not put that loss in unapplied time?
You can quickly see what the amount is month to month, if it is in another spot, it is hard to track.

[mscarsmart]

You are doing it right. Although, my question is--were the 5 hours at time and a half which means that dollar amount would be higher.

One way to keep Work in Process in order is to take out of the "hours/dollars" inventory, what you put in. Any differences should go to the adjusted cost of sale.

Another area you can make some adjustments, as an example: you decide to pay a tech a little more time than what you will bill the customer (maybe he ran into a problem), you enter the billable hours to the customer portion and increase the tech hours for costing. It cost you more to do that job and the net result will show in that R.O. gross profit %.

You can also adjust tech cost rates in most computer systems. Let's say you pay a $1.00 more per hour to do warranty work, you adjust this rate override on the tech's rate screen and the computer will automatically add the $1.00 cost to the R.O. cost. This would also work with spiffs, etc., but you need to make sure you correct these overrides when programs end, or your costing will be incorrect.