From an accounting point of view, use the Labour Content field in labour stock records to help calculate and report on cost of goods for billed labour.
This field is used to nominate a value that is the proportion of 1 hour that the stock code unit represents.
This labour stock code is equivalent to 30 minutes, and is sold as a fee, rather than as an hour.
The labour content for this example is 0.50.
When invoicing 1 quantity of the stock code, Jim2 reads this as 30 minutes of labour being sold, and displays this in stock profit reports as Labour, allowing comparison to other billable labour codes and the actual hours used on jobs.
If a code represents 2½ hours, the labour content field would show 2.50.
A cost of labour can be nominated in the Details tab of labour stock in the following way:
▪Open the Labour stock record.
▪Go to the Details tab at the top of the record.
▪In the Labour Content field nominate the expected quantity of real labour units used to supply one unit measure of billable labour.
▪Enter a cost for the labour content.
▪Click Save & Close.
The real costs to provide each real labour hour should not be the hourly rate staff are paid – it should be an actual running cost for providing one hour of time, taking into account the costs of such things as overheads, support and administration staff, etc. Think of it as what it really costs to run the business for an hour!
Now, when selling each unit of labour stock, Jim2 will calculate the equivalent cost to do so in the job profit reports. This does not affect the general ledger – it is purely a way to show running costs in profit reports.
Where an hourly rate has been nominated in user cardfiles, the job profit report will pick up both the labour content (cost as above) and the user rate for the Name on the job in question. In other words, costs will be doubled!
Labour stock codes are usually expressed as a unit of hour when entered on a job. In some circumstances it is more appropriate to use Fee or Each on the job, however, the ability to track how many hours were invoiced on the job would be lost.
To assist with this, the Labour Content field in the stock record Details tab can be populated with a value that tells Jim2 the proportion of an hour that is being invoiced each time this stock code is included on a job.
As an example: The labour stock code of W99 may have a description of Workshop Labour and a unit measure of Fee. If the Labour Content field was populated with the quantity of 2, then Jim2 knows that each time 1 x W99 is sold, it is actually 2 hours of labour.
The Labour Content field is then integral to job profit reports, and Job List – Job Profit reports, where it displays how many hours are invoiced along with how many units.