Background
This article contains instruction for a suggested method for associating the cost of labor with an item you build.
Depending on the complexity of your manufacturing process and the way your business works this may or may not work for you.
Setup Process
There are several steps to setting this up inside of AccountEdge. You will need to:
Create a Labor Cost of Sales account
Create a wage category called Labor linked to that Cost of Sales account
Create an item called Labor linked to same Cost of Sales account instead of an inventory account
Step 1: Create an Account for Labor
Go to Lists > Accounts from the menu bar at the top of the screen
Click on the Cost of Sales tab
Click the New button in the bottom left
Enter an account number (one that isn't already used) and hit tab
Enter the name of the account (Labor)
Click OK
Step 2: Create a Wage for Labor
Go to Lists > Payroll Categories > Wages from the menu bar at the top of the screen
Click the New button in the bottom left
Type in the Wage name (Labor)
Type of Wage should be Hourly
Click the box for Override Employee's Wage Expense Account
Choose the Labor account you set up in Step 1
Click on the Employee button at the bottom left
Check off all employees that should have this Wage
Click OK
Click OK to close out of the Wage creation screen
Step 3: Create a Labor Item
Go to Lists > Items from the menu bar at the top of the screen
Click the New button in the bottom left
Enter an item number (Labor) and hit tab
Enter an item name (Labor) and hit tab
At the bottom left place a check mark in the box labeled "I Inventory This Item"
Across from that where it says "Asset Account for Item Inventory" choose the Cost of Sales account we created in Step 1
Running Payroll and Creating Inventory Adjustments
Once everything is set up you can begin to work through the process of running payroll for the employee and putting the value of that payroll into the Labor items.
Running Payroll
When you run payroll for any employees whose labor will be associated with the building of items you need to enter the cost of their labor in the Labor wage we initially set up.
Go to Payroll Module and click the Process Payroll button as normal
Select the employee/set of employees, the date range you want to pay and the pay date
Click next
Click the arrow next to an employee's name to bring up the check details
Below the check in the gridded section enter the number of hours and the dollar value that the Labor cost you
Make any other adjustments as needed and click OK
Repeat this process for any other employees you need to account for and then click Record to finish processing the paychecks
Creating an Inventory Adjustment to Include Cost
Go to the Inventory Module
Click on the Adjust Inventory button
Select the Labor item
Enter the quantity as the total number of hours for employees Labor you included in Payroll
Enter the Unit Cost as the cost of the labor (in my case $20.00 an hour)
Choose the same Cost of Sales account that you linked on the Labor item
Click Record in the bottom left
Building the Finished Good
Once you have added the cost of labor to the Labor item you will just need to use that item in the Auto-build of the finished good.
Final Note
This process is meant to allow you to build in the cost of Labor into your item without double-booking your cost.
How this works is:
The original payroll is booked to the Cost of Sales account for Labor
The inventory adjustment is a double-sided entry to the Labor Cost of Sales account. This adds value to the item without actually effecting your books
When you build the finished good you remove the cost of Labor from the Labor item to the finished good
When you actually sell the finished good you book the total cost to the Finished Good's Cost of Sales
This process is not meant as a hard and fast rule but one way you could tackle a fairly complicated process.