Job labor hours are not synchronized with payroll hours
Job labor hours in DBA are not used as payroll hours in your payroll system. Job labor and payroll are independent processes with different objectives. The two processes interact with each other indirectly through labor absorption costing.
Payroll hours are based on time and attendance
Payroll hours are based on time and attendance, which means employees must be paid for their time whether they work on jobs or not. A significant portion of production worker hours is often spent on non-job activities.
Job labor hours only account for job time
By contrast, job labor hours only account for actual job time. Non-job hours are not tracked.
Job labor hours are often standard hours
Payroll hours are always actual hours, but job sequences in many work centers are updated at standard hours because it is not efficient to collect and enter actual hours for routine processes or machine-based processes with non-variable cycle times. A system setting is also available that automatically updates all setup time with standard hours. Reported job hours are therefore a blend of standard and actual hours that are unsuitable for payroll entry.
Payroll costs are reflected in work center hourly labor rates
Payroll costs for direct labor employees and contractors are reflected in work center hourly labor rates, which are derived from the shop labor rate calculated in the Shop Rates screen.
The hourly shop rate is based on actual payroll costs divided by reported job hours for a specified date range. The hourly shop rate reflects total downtime and standard and actual hours to provide an accurate costing basis for job labor transactions.
There is no job-payroll synchronization with absorption costing
DBA uses absorption costing whereby hourly labor rates are used to absorb actual labor costs into job labor transactions. With absorption costing there is no synchronization of job hours and costs with payroll hours and costs.
Post direct labor payroll costs to separate accounts
The only payroll requirement for labor costing purposes is to post payroll costs for direct labor production employees to separate accounts so that direct labor costs can be captured for entry in the Shop Rates screen.
Track payroll hours independently from job hours
Payroll time tracking is completely different than the actual job hours tracking that is used in appropriate work centers. Payroll hours should be tracked independently using an appropriate time and attendance tracking system.