GAAP) is we do not use actual employee rates to apply to jobs but
rather a weighted average for the resource group. When a salaried
employee works on a job, the same rate is applied. Yes this can cause
a skew in the results particularly when some jobs require more
talented/higher paid assemblers. This method of course does not yield
actual cost accounting but, an "average" which happens to be "good
enough" for the powers that be.
> What's the proper accounting thing to do when a salaried employee,
> say an engineer, performs job setups or even runs production. My
> Controller says I cannot use a blended labor rate for him for the 8
> or 10 hours per week that he's working on production because that
> would not be GAAP.
> I'm thinking why should this job cost less just because an engineer
> produced it rather than a shop employee (we are on average cost -
> 9.05.702a). Can't the labor rate that I use to charge him to the job
> reduce the amount of his salary that gets charged to engineering
> I have a similar problem with a few hourly employees that we do not
> pay. They are free to me but I don't want the jobs they just happen
> to work on to artificially show a low labor cost because they happen
> to use a 'free' employee this particular run.