Job costing (labor allocation)
Job costing, also called labor allocation, is coding hours and pay to the job, project, client, location, department, or cost code where the work happened.
Job costing puts labor cost on the right job instead of a general account. One time record often feeds payroll, billing, and labor accounting at once. A single shift can split across several jobs, projects, clients, locations, departments, tasks, or classifications. Payroll has to preserve each split all the way through to the general ledger. The reporting loop closes only once job-level labor cost returns to the operating system that manages the job or project.
What happens to each punch between time and payroll?
The job or cost code, location, task, workers’ compensationWorkers’ compensation. Workers’ compensation is state-mandated insurance that pays medical expenses and partial lost wages when an employee is injured or becomes ill because of their job.Click to open the term code, union classification, or certified-payroll segment on each punch must reach payroll unchanged. A cost code identifies a type of work within a job or phase, such as framing. Wherever job-level reporting is required, hours without a job or cost code go to an exception queue. Losing job or location context between time and payroll is a recognized error. Unallocated cost is a standard quality measure, because cost slips off the job without a required field.
| PUNCH | WHAT HAPPENS |
|---|---|
| Split across jobs | Each segment keeps its own hours |
| Split shift collapsed into one job code | The other jobs are understated |
| No job or cost code | Goes to an exception queue for review |
| Posted to a generic account | Every job it belonged to is understated |
General information, not legal or tax advice. Apply current federal and state rules with qualified guidance.