Recording Labour Cost of Sale in Navigator

Navigator allows for the recording of Labour Cost of Sale corresponding to every hour sold.

Each technician can be assigned an Hourly Labour Cost, which represents the effective cost of every hour they sell rather than their actual hourly wage. For example, if a technician earns £10 per hour and has an efficiency rating of 80%, the effective Hourly Cost for every hour billed is calculated as follows:

When a job is invoiced, an accrual for Labour Cost is recorded by debiting the Labour Cost of Sale account (e.g., 1.20.30.20), which is further analysed by customer category, make, and job type. At the same time, the corresponding credit is made to the balance sheet account 1.20.70.20. Note that this account will always reflect department 20, even for internal jobs where the sale may be attributed to departments 21 or 22.

At the end of each month, it is essential to reconcile this accrual account with the actual payroll for technicians. The payroll costs for technicians should be allocated to the x.20.70.20 account, and any discrepancies should be manually journaled to a Labour Cost of Sale adjustment account (or back to the Labour Cost of Sale account, although this won’t allow for job type analysis).

Alternatively, if the technician's Hourly Labour Cost is set to zero, the payroll costs can be charged directly to the Labour Cost account (x.20.30.20). However, this approach will not provide a breakdown of costs by invoice type or other categories.