Setup: Job Costing Setup: Job Costing
Job Costing has the capability of managing and analyzing information from all types of construction companies. In order to make it most useful to any specific company, the system allows certain information to be tailored. This includes such information as the number of digits in a job number or a cost code, the system’s interrelationship to the General Ledger, the assignment of burden, the use of square footage information, and modifying the methods the system uses to project costs.
This screen can be accessed by selecting Setup > Accounting Options > Job Costing. It can also be accessed by right-clicking the JC menu icon.
Press the General tab and the following screen will come into view. This screen allows the user to specify the Job and Cost Code structure, assign the completion cost method and track installed material units. Cost Codes may also be setup through this option.
Number of Digits in Job number:
Enter a number from 1 to 10. Typically, specialty contractors who do a large number of jobs will select more digit job numbers. General contractors doing a few large jobs might select 3-digit job numbers.
Number of Digits in Cost Code
Cost codes consist of three portions. The code, the type and the group. The 'code' portion consists of 1 to 10 digits as specified here. The 'type' and 'group' codes are entered elsewhere in the system. Enter a number from 1 to 10.
Estimated Cost Completion Method
The system allows projected completion costs to be calculated in three ways. The difference is the appearance of the field reports. By selecting one of these field reports, various aspects of how the company will operate on a day-to-day basis are defined. If field reports are not used at all, the system will use accounting information to estimate completion costs on a best available information basis. To operate in this simple mode, select method #1. If field reports will be used, but not religiously, select method #1 also. The primary difference between method #1 and methods #2 and #3 is that method #1 requires an estimated percent complete on the field report, whereas a dollar amount is required for methods #2 and #3.
1. User enters completion percentage (radio button)
Select this option to use the method that requires an estimated percent complete on the field report.
2. User enters final completion cost (radio button)
Select this option to use the method that requires a periodic management meeting to determine the estimated cost at completion for each job cost code.
3. User enters additional cost to complete (radio button)
Select this option to use the method that requires a periodic management meeting to determine any change to the estimated cost at completion for each job cost code. During field report entry, a positive amount would be entered in case of an anticipated overrun, and a negative amount for an anticipated underrun.
4. User enters extra anticipated costs
Select this option to use the method that requires a periodic management meeting to determine how much more than the budgeted cost will be spent on each individual cost code budget. During field report entry, the amount entered will represent the amount above the listed budget that will be spent.
This section allows the user to customize the Job Manager Titles that appear throughout the system and on reports.
Title 1
Title 1 by default is Project Manager. Enter the desired title in the box.
Title 2
Title 2 by default is Superintendent. Enter the desired title in the box.
Report Totaling for the 1st and 2nd level subtotal specify which digit is the low-order digit of the division by counting the digits to the right including the low-order digit. For example: in the job cost code 98765, if 98 represented the first division, the digit '8' would be the low order digit for the first division. Enter the number '4' to signify the low-order digit being the 4th digit from the right. Follow the same pattern for the second division, if any.
Enter a value here that represents how far the projected cost can vary from the calculated budget before the Job Cost Analysis Report uses the budgeted cost rather than the calculated cost as the projected cost amount.
This affects the way in which material costs are projected throughout the system. The principal problem this question addresses is the time delay (possibly weeks) between when materials are delivered to the site and the later receipt of invoices. If job cost reports are done weekly, material which has been delivered on site may have been installed and show as work completed on the job cost report, yet it is possible that no invoices have arrived at the accounting office. The accounting office would then believe the cost-to-date is zero dollars, whereas the field reports might indicate 100% complete. It is obvious that an item that is 100% complete should not underrun its budget to the extent that it costs nothing. In order to solve this dilemma, we have made the assumption that material is usually estimated fairly accurately. When the material percent variance is entered here, the system is instructed to compare the expected expenditures (calculated from the field reported percent complete multiplied by the budget) to the actual expenditures from invoices to determine whether it is ‘likely’ that all of the invoices are in before projecting ultimate costs. If the projected cost is less than X% of the budget, it may be assumed that this is because the invoices have not come in yet. The percent would be entered at this point. For example: if the estimation is within 10% accuracy, type in 10.00. Thereafter, if the projected material cost is less than 10% of the budget, the Job Cost Analysis Report would use the budgeted cost rather than the calculated cost as the projected cost amount. Most contractors enter 10% to 30% here.
Track Installed Materials: (check box)
Checking this box will track installed materials; otherwise, leave the box unchecked. Labor codes may track both hours and material units installed. When setting up a job, a code (i.e. framing) would normally have both a labor and a material code assigned. The labor code would track hours of work and the material code would track the number of board feet of lumber purchased. In most operations this is sufficient for management of the business. Those contractors wishing to religiously use weekly (or other time period) field report entry may also instruct the system to track the number of material units installed (as opposed to the number purchased). If this option is exercised, understand that the organization must commit to the extra effort of weekly tracking of installed units. Installed units are tracked in the Labor Record. If installed material units are tracked, the Labor Unit in each Labor Record to a Material Unit (e.g. Bd. Ft., Sq. Ft., or Cu. Yd) must be changed.
Include Subcontracts in Committed Costs (check box)
Checking this box will include subcontracts in committed costs; otherwise, leave the box unchecked.
Charge Costs Directly to Change Orders (check box)
When change orders are added to a job, subsequent costs to the affected cost code budgets can be entered in either of two ways. First, costs can always be charged to the main cost code, regardless of whether there are change orders attached. Alternatively, new costs could be charged either to the original budget (the "Base" budget), or directly to the Change Order.
Let's use as an example cost code 04100M that has an original budget of $1,000.00 and a change order labeled CO1 in the amount of $250.00, the current budget is $1,250.00.
Using the first method, any future costs will be charged directly to code 04100M, regardless of whether the cost happened as a result of the change order.
Using the second method, future costs can either be charged to the base budget of 04100M, or to the cost code AND change order (04100M CO1), depending on whether this cost applies specifically to the changes.
This selection is universal, meaning that the setting indicated here will apply to ALL job cost code budgets in the system. If the box is checked, then all entry windows that accept a job and cost code will also accept a change order number. If the box is not checked, the Change Order field will be hidden on all the entry windows.
This selection allows the user to indicate whether the system should allow a new job to be saved with no Project Manager or Superintendent assigned. This can be disallowed, or the user can be warned of the situation when a job is being saved.
Using these settings the operator can instruct the system to automatically assign job numbers to newly entered jobs in sequential order.
Auto-Assign Job ID during Job Setup (check box)
Check this box and the system will automatically assign the next available Job ID number to each job entered through Job Setup.
Interval
When a new job is entered, it will receive the "Next Available Job ID" entered below. At the same time, the "Next Available Job ID" will be increased by this interval. For example, lets say the interval is set at "10" and the Next Available Job ID is set at "JB220." When a new job is added, its Job ID will default to "JB220" and the Next Available Job ID will be changed to "JB230."
Next Available Job ID
Specify the next available Job ID number here.
Create All New Jobs as Certified Jobs (check box)
If this box is checked, then all newly created jobs will have the Certified Job box checked by default.
Enter Job Cost Codes (button)
This button will cause the Cost Code screen to come into view.
Changing the Job Number and /or Cost Codes
Once the Job number and Cost code Structure has been set up, the number of digits may be increased. Note: Once a change has been made it is not reversible. The only way to return to a smaller number of digits is to restore a backup from before changing the account structure.
After the total number of digits in the Job Cost number and /or Cost Codes have been increased and the OK button pressed, the following message will come into view.
The No button is highlighted by default. If it is not desirable to proceed, press the No button. To proceed, press the Yes button and the following screen will come into view.
The Job Number Change and/or Cost Code Change fields will only be highlighted if a change is being made otherwise it will grayed out.
Job Number and/ or Cost Code Change
The Job Number and Cost Code Change fields are similar in the way they work. Specify the characters to add and whether to add them to the beginning or end of the Job number or Cost Code.
Add this Character
Specify the character(s) to assign to the Job or Cost Code number to make the change. This may be any alpha or numeric character. This character(s) will be assigned to all Jobs or Cost Codes.
To the BEGINNING of the Account Number (radio button)
If this radio button is selected, the character(s) specified in the previous field will be added to the beginning of all Job numbers or Cost Codes.
To the END of the Account Number (radio button)
If this radio button is selected, the character(s) specified in the previous field will be added to the end of all Job numbers. or Cost Codes
If the Proceed button is pressed, the data files will be updated to the new Job Numbers and / or Cost Codes. The following screen will come into view.
If the Continue button is pressed, all data files will be permanently changed to the new Job Number / Cost Code structure. To cancel, press the Undo button and the Job Number / Cost Code structure will remain the same.
Budget & Burden Defaults (tab)
Press the Budget & Burden Defaults tab and the following screen will come into view. This screen allows the user to specify the system’s interrelationship to the General Ledger and the assignment of burden accounts.
Default G/L Accounts for Job Budgeting
When a budget for a job is set up, there is one record created for every job phase. During the course of the job, this record maintains all costs on that phase. When the job is completed, the costs for that phase are transferred from the control account to a Closed Job Cost Account which corresponds to the type (Material, Labor, Subcontract, Equipment ,Burden or General) of each Cost Code used during the job (i.e. Material Costs will be closed to Closed Jobs Material Costs). In order for this transfer to occur, the system must know what the Job cost closed accounts should be. Use the same or different closed job account(s) for any cost type (i.e. Material and Labor may both close into closed job account #41640).
User-Definable Cost Type
The sixth cost type displayed on the screen is a user-definable cost type. Regardless of what the label for the cost type is, the one-letter abbreviation will be the letter 'B'. In all entry screens, the cost type must be entered as 'B', but all screens and reports that display the cost type label will display the label indicated here.
Job Cost Budget Defaults are Labor, Material, Subcontract, Equipment, General, and Burden. Most of the Accounts should be self-explanatory; however, some need additional clarification. Enter the General Ledger Account number or press the lookup button and the General Ledger Account screen comes into view. Highlight the desired account number and press the Select button.
Burden expenses include any additional charge for labor costs that are not true labor. (i.e. Worker's Comp. insurance,or any expense for labor that can be charged to a separate account.)
The account specified here is the standard (default) control account for all Job Cost Codes of this type (M, L, S, E, G or B). When the budgets are entered for each job or cost code on any job, the system will use this control account if another account is not selected during Job Cost Budget Entry. Clicking on the lookup button will cause the General Ledger Accounts to come into view. Highlight the desired account and press the Select button.
When a job is completed, the costs for each phase are transferred from an open account to a 'Closed Job Account' which corresponds to the type (M, L, S, E, G or B) that each cost code was assigned during the job (i.e. 'Material Costs' will be closed to 'Closed Jobs Material Costs'). In order for this transfer to occur, the system must know what the job cost closed accounts should be. The same closed job account may be used for more than one cost type. Clicking on the lookup button will cause the General Ledger Accounts to come into view and from there the correct account can be selected. Highlight the desired account and press the Select button.
Shows the jobs from previous years. Enter the account or Click on the lookup button and the General Ledger Accounts will come into view. Highlight the correct account and press the Select button.
At year end, figures can be entered into the Prior Years accounts listed here in order to maintain a balance between job cost and the General Ledger. For example: if the Job Cost Summary by Cost Type Report shows a cost of $100,000 in Labor costs at year end, the closing transaction to clear the Income statement at year end would follow these two steps:
1. Zero the account balances for All Incomes Statement accounts and post the difference (YTD Profit) to the Retained Earnings account. (This is an automated process called Year End Closing).
2. Charge a Debit for a $100,000 to the Labor Open Jobs account. Charge a credit for $100,000 to the Labor Prior Years account.
Following these steps will maintain a balance between the Job Costing and the Labor Open Jobs GL Account, while at the same time keeping the Income Statement balance at zero to start the new Year.
Charges to jobs will be increased (burdened) by the assigned percentage. These percentages are the standard (default) percentages used by the system. If no other percentage is specified when job cost codes are entered using Job Cost Budget Entry, the percentage specified here will be used. In the case of Labor, this burden percentage is over and above the various burdens assigned through the Payroll module.
$/Unit
Charges to Jobs can also be assigned by this cost per unit. If no other $/Unit Burden is assigned in the Job Costing Budget Entry, this price per unit will be used.
Once a burden has been calculated using the percentage specified above, it may be assigned (debited) to the same cost code as the transaction. Otherwise, it may be assigned to a separate cost code on each job. To have burden assigned to the same code, type "Distribute". Otherwise, enter a Job Cost code including the code, type and group if applicable (e.g. 1024L, 999999G, or 47G1).
When job costs are burdened, the accounts to be charged (debited) have already been specified. In the CONTRA field, specify an applied overhead account in the General Ledger to be credited. This account is most often an expense account (contra). Clicking on the lookup button will cause the General Ledger Accounts to come into view and from there the correct account can be selected.
When the Force Defaults button is pressed, the following screen comes into view.
This screen allows the user to choose which process to perform. Forcing defaults takes the General Ledger account numbers entered on the Job Cost tab and places them into the Cost Codes which have already been created and/or budgeted.
The program can print Subcontract, and Change order forms. There are standard formats for these forms available, or FormMaker can be used to create customized forms.
For each form type, the following options are available.
Form Type (drop-down list)
Select from Standard or FormMaker.
Select Logo (button)
If Standard is selected as the form type, this button will be available. Click the button and the following window will come into view:
Use Same Logo for All Forms (checkbox)
If this box is checked, the setup completed on this window will affect ALL printed forms. This eliminates the need for adding a logo to each different form type. If the box is not checked, the setup completed on this window will only affect the current form.
No Logo or Company Information
No Logo or company information will be printed.
Company Information Only
Only company information will be printed.
Logo and Company Information
Logo and Company Information prints a logo and a text company name and address.
Logo Only
Logo Only is to be used when the logo contains the company address also.
Logo File Name
Enter the location of the logo bitmap or press the lookup button and select the location.
FormMaker Filename
If FormMaker is selected as the Form Type, this entry field will be available. Use the lookup button to pick a report file that has been designed for printing the desired form.