Do you use job costing in your business? 

Job costing is accounting that tracks the costs and revenues by “job” and enables reporting of profitability by the job. Payroll is a principal cost component when it comes to job costing, and luckily, with time tracking software, we can have a perfect record of time employees spend on a job and allocate their costs accordingly.


Wait, do your employees ever work overtime? (Yes!) How do you allocate their overtime? (How should I?)

Calculating and distributing employee overtime is a burdensome process that challenges many businesses every week. The solution for overtime allocation in job costing seems manual and even more complicated. Why?


Let us start from one, what is overtime? 

Overtime is the amount of time an employee works beyond standard working hours, typically 40 hours per week. When an employee works overtime, they get to receive overtime pay. At a minimum, overtime pay is not less than time and one-half their regular pay rates. Without getting into the particulars of the law, overtime pay is more expensive, and rightly so.


Why would overtime create a problem in job costing? 

Suppose your employees worked on a job on Monday that messed with scheduling, and you ended up into overtime starting from Wednesday. What happens is that all the overtime is attributed to the jobs worked at the end of the week instead of the project that was worked on Monday, which messed with the schedule in the first place.

In other words, instead of each job getting a share in overtime, the last jobs worked that week get all the overtime. With job costing, the jobs worked on Thursday and Friday are more expensive and are assumed to be less profitable.


So what is the solution to allocate overtime correctly?

At On Track, we do not repose. We serve our clients to perfection. So if a contractor ran into overtime allocation issues, we had to find a solution. Hello and welcome to our Method Timesheet Allocation Application – the solution to overtime allocation in job costing! Our app takes all the jobs worked during the week and applies overtime as a percentage. With a proportion of overtime allocated to jobs accordingly, you no longer need to worry that your end-of-week jobs will not show as profitable due to overtime pay.


Get in touch today!

Say finale to the overtime allocation issues in your firm. Contact an On Track specialist to learn more about our app features and how the app integrates with QuickBooks for a smooth and seamless overtime allocation experience.


Please note. Our app works with Intuit (QB) Payroll only. If you use any other payroll processing company, you will first need to change to Intuit payroll to use this app.

Toby Heilbrun

Author Toby Heilbrun

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