Productivity Tip 18 – Labour Cost Recovery
Productivity gains can be achieved through accurate Labour Cost Recovery measures.
When booking labour costs to Jobs or Assemblies an offset posting is required to counter the direct wages that are typically entered as an expense. We call the accounts posted to, ‘Labour Recovery Accounts’.
Labour Recovery Accounts enable the analysis and reporting of the recovery of direct and overhead costs – in other words:
The resulting Labour Variance can then be used to more accurately determine the ongoing Standard Labour Costs.
Once this is achieved, the business will have a more reliable understanding of which products and services are profitable.