O'Reilly logo

Accounting Best Practices, Fifth Edition by Steven M. Bragg Englewood, Colorado

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

17–6. Avoid Job Costing through the Payroll System

Some controllers have elaborate cost accounting systems set up that accumulate a variety of costs from many sources, sometimes to be used for activity-based costing and, more frequently, for job costing. One of these costs is labor, which is sometimes accumulated through the payroll system. When this is done, employees use lengthy time cards where they record the time spent on many activities during the day, resulting in vastly longer payroll records than would otherwise be the case. This is a problem when the payroll staff is asked to sort through and add up all of the job-costing records, since this increases the workload of the payroll personnel by an order of magnitude. In addition, the payroll staff may be asked to enter the job-costing information that it has just compiled into the job-costing database, which is yet another task that gets in the way of processing the payroll.

The solution is to not allow job costing to be merged into the payroll function, thereby allowing the payroll staff to vastly reduce the amount of work it must complete, as well as shrink the number of opportunities for calculation errors. However, this step may meet with opposition from those people who need the job-costing records. There are several ways to avoid conflict over the issue. One is to analyze who is charging time to various projects or activities and see if the proportions of time charged vary significantly over time; if they do not, ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required