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Home : Essentials of Payroll : Avoid Job Costing through the Payroll System
Avoid Job Costing through the Payroll SystemAvoid Job Costing through the Payroll SystemSome controllers have elaborate cost accounting systems set up to 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 on which they record the time spent on many of their 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 they have compiled into the job-costing database, yet another task that gets in the way of processing the payroll. The obvious solution is to disallow job costing to be merged into the payroll function, thereby enabling the payroll staff to vastly reduce the amount of work they 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. Fortunately, there are several ways to avoid conflict over the issue. One is to analyze who is charging time to various projects or activities and determine if the proportions to time charged vary significantly over time; if they do not, there is no reason to continue tracking job-costing information for hours worked. Another possibility is to split the functions so that the payroll staff collects their payroll data independently of the job-costing data collection, which can be handled by someone else. Either option will keep the job-costing function from interfering with the orderly collection of payroll information. 170
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