Sorry ahead of time for the long post.
We have a Sole Sourced Cost-Plus government contract that has certain requirements, one being the segregation and accumulation of direct & indirect costs. I’m trying to verify this in Epicor, and I’ve run into an issue. Payroll pay rate vs. job-costing pay rate, for a salaried employee that is clocking in & out of a job.
Here’s the example scenario;
Salaried Emp makes $104,000 per year or $50 an hour (rate made up for simplicity). Normally a salary paycheck without Clocking In & Out would be; 40 * $50 = $2,000. If the employee Clocks In & Out during the week and accumulates 50 hours, when paying for this week, the payroll system will calculate a new pay rate based on the total 50 hours worked. It would look like this; $2000 / 50 = $40/hour. The system is doing what I expect it to do because it knows that total hours and what the weekly pay is.
However, the job costing is in real time, so it does not have the knowledge, of the 50 hours, at that point to calculate a new pay rate. Therefore, job costing is done at the regular pay rate. Which cause a disparency between the Direct Labor GL (payroll, $40 /hours) and the Applied Direct Labor (job costing, $50).
Now, Epicor does allow you to enter a different payroll rate vs. a job costing rate, but it’s still a static rate and as far as I can see would never be dynamic. The only possible solution I can envision would be that once payroll is posted, a job adjustment gets created to offset the difference between the 2… But that sounds complicated and hard to audit.
Has any other government contractors dealt with this? Or does anyone know something I don’t?
Thanks for taking the time to read this.
Howell Laboratories, Inc.