Labor and burden variance from job closings

I am new to Job costing in Epicor. We are using standard costing. We have decoupled our actual labor reporting (the hours paid to employees) from labor reporting. Operators clock in and out of jobs each day. The standard hours for the quantity compIeted is extended by the standard rate for labor and burden and issued to FG or sub-components when completed and the job is closed. The labor variance (and burden) that results from the job closing is the difference between actual hours issued to the job and the standard hours allowed for the # of units completed (again extended by rates). This seems to be an artificial variance as I account for my actual labor paid separately. What is the offset to this variance? What if our operators are the clocking in correctly and actually clock in more hours than actually paid?

When clocking into jobs, the labor goes to WIP Labor/Burden and is offset by the Applied Labor and Applied Burden accounts.

When the manufacturing receipt is done, the transfer is made from WIP to Inventory. Any remaining WIP is removed then the job is closed and moved to the MFG Variance account.

As a rule, when you do payroll, the direct and indirect labor is moved from the Applied Labor to Payroll Payable. Any difference in the Applied Labor after that move is basically a cost of good sold or manufacturing overhead.

Hope that helps.

Charlie Smith

CRS Consulting Services


Thanks Charlie,

I’ll need to trace a transaction through our system before I can respond. Thanks for your help!