EBMS allows the user to determine which general ledger accounts require a job code and which do not. If this optional feature is activated, only general ledger accounts that are identified as direct job cost accounts can be used to post job costs. Any invoice or timecard line that does not contain a job code must contain a general ledger code that is NOT set as a direct job cost account. This restriction is active within a purchase order, expense invoice, timecard, and inventory transfer windows. This optional feature allows the user to divide all the company expenses into two groups:
Direct job costs – Accounts with Direct
Job cost account option ON. This option
is found within the Advanced
tab of each expense general ledger account.
Go to Financials > Chart of Accounts
and select any expense account. See example in
Direct costs are managed within a job since the manager knows that ALL costs are allocated directly to a job. Direct costs such as materials, direct labor, subcontracts, rentals, etc are compared to the job budget for these items.
Indirect job costs - Accounts with Direct Job cost account option OFF
Indirect costs must be managed differently. These costs can NOT be posted to a job since they are managed by using an overhead percentage. The management of indirect costs changes substantially since they are not included in the job cost amounts. The examples below may be some possible ways to manage and budget indirect costs.
Enter the overhead percentage within each classification to add the overhead costs (indirect) to the actual costs (direct). Review the Job Overhead > Globally Change Overhead Percentages section for detail on setting overhead percentages for stages.
Continue with the next section to set or change this optional feature.
Repeat the steps for each general ledger account that will record direct job costs.
Multiple labor accounts must be created if the user wishes to post direct job costs such as manufacturing labor used in a specific job into the same account as miscellaneous labor costs that are not allocated to a job. The labor G/L Account should be divided into two accounts named Direct Labor Costs and Indirect labor Costs. The same account CANNOT contain both direct job costs and miscellaneous costs that are not allocated to a job when the Determine Direct Job Cost Accounts option is turned ON.
Inventory transactions created within the expense invoice, inventory transfer, and sales invoice are affected by this switch. Review the Inventory Items and Direct Job Costs section for more details.