Discovering the Best About RFMS - When, How, Who and What of Job Costing

When should we job cost?

• When ALL Costs have been accumulated and posted to job

How do we make sure all jobs get closed?

• Un-delivered reports should be run for sales/operation review on a regular basis to ensure all jobs that qualify are CLOSED.
• Audit/Compare closed jobs to schedule book or Schedule Pro to ensure all jobs installed have been closed.
• Job Cost Audit-Should be run at the end of the month to track bottlenecks of job costing and double check if a job was opened that was closed.

Who Should be in charge of this task?

• Job costing should be completed by someone who is detailed oriented, has access to or knowledge of profit margins and commissions and who can call attention to jobs that do not "look right".

What about "costs" that come in later?

• If you are continually opening jobs to apply or change costs that come in later, then this is a HUGE indicator that the above procedures are not being followed and should be reviewed.
• The ONLY TIME RFMS recommends un-job costing an order to attach a cost to the order is when a cost comes in during the same period or month and the journal has not been closed.
• Un-job costing will reverse the job including taxes and commissions.  Updating the job and re-job costing will then post the newly changed amounts to the files.
• If the cost comes in during a different period or month and/or Journal has been closed then it is recommended to OPEN A NEW JOB AND ATTACH IT TO THE ORIGINAL JOB USING GROUP BILLING.

Job Cost/Financials (what numbers should tie and how)

It is important to make sure ALL COSTS are accounted for in Job Costs to enable accurate profit and commission calculations.

• Job Cost Analysis ties to the Income Statement.
• Differences from the Job Cost Analysis Report to the Income Statement Accounts or Gross Profit Line Item on the Financials should be explained.
• Material Costs should tie to Cost of Materials.
• Service Costs should tie to all service costs put into the Providers Module.  These could be a combination of many accounts that labor is coded to including Sub Contract Labor, Payroll Labor, Benefit/Burden, Credit Card Fee, etc.
• An adjustment will also need to be made to the Service Costs for Labor/Work in progress.
• This includes jobs that have labor that is already paid for but NOT yet job costed (therefore not on the report).
• Also, there may be jobs that ARE job costed but the check for payroll employees have not yet been posted.
• Tax Cost should tie to Sales Tax Accounts (set up varies to accommodate Sales vs. Use Tax and depends on if paying tax to the State or Pre-Paid vendor).
• If the freight costs are posted directly to Freight Expense as the material arrives then there will be a difference between the costs that have pulled from job cost and what has been posted to this account.  The difference should be noted for Profit amount to tie.
• Profit should tie to income statement "top line".  Profit amount should be adjusted for freight difference, overhead and commissions.
• Adjustment should be made for Commissions Earned to the Profit amount on Job Cost Analysis if they are including them in your Costs of Labor.  If commissions are coded as Overhead Expense on the Income Statement then it is not necessary to adjust commissions in order to tie to Gross Profit Line Item on the Income Statement.