Applied Labor/Applied Overhead - Where should they be on the financials?

Epicor ERP 10
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When it comes to the Applied Labor and/or Applied Overhead accounts, what is the most common practice of where to place these in your financial reporting? I’ve been an end user company where an Epicor consultant setup our financials and recently, I’ve been working with new customer implementations. When I pose the questions to different consultants, I get varying answers. I’m reaching out to the guru’s here to hear what’s the most common practice.

Thanks

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Applied Labor is the contra to any labor transactions. Direct Labor goes to WIP and Indirect Labor goes to the expense account it is directed to.

Applied labor is basically Accrued Payroll. I have seen it in a number of places depending on someone’s wishes.

  • Balance Sheet – Liability – Accrued Payroll – This is reduced when you do payroll.

  • Income Statement – COGS – Applied Labor – This can be offset when you do payroll as a direct/indirect labor account.

  • Income Statement – SG&A – Applied Labor – Again, same as above.

Applied Overhead is the contra to any Burden transactions that go into WIP. This stays on the Income Statement and would generally be found in the COGS or SG&A as an offset to any manufacturing expenses or depreciation accrued.

Clear as mud?

Charlie Smith

CRS Consulting Services

860-919-1708

1 Like
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Thanks Charlie,
Nicely said! Yes, “clear as mud” is a reasonable statement. It always seems hard to explain when you’re dealing with new users who haven’t seen this before.

Again, thanks for the reply and guidance! Great job!

Best regards,
Jeff Bryant

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@CTCharlie (or anyone) If you do a Job Labor Adjustment Entry - This amount gets credited to Applied Labor (or Labor Absorbed) - when entered through a Job Labor Adjustment (Labor or Material) - how does Epicor resolve it on the other side (i.e. consume it) or does a journal entry need to be made to offset it?