Indirect Allocations

SUGGESTED

Another indirect allocation question.  We have always allocated based on a percentage of direct labor. This has worked great in the past as a subcontractor. The system does this automatically adding the set percentage to the direct labor hours worked.  As the labor shortage becomes more of a problem, we have had to lean on subcontractors a lot more.  Jobs that are performed by subs don't get hit with the indirect allocation, does anyone know of a way for Sage to do these allocations automatically?  How are other companies handling this?  We have talked about starting to look at indirects as a percentage of total direct costs or on direct labor and subcontract costs.  However, having only ever done it on direct labor makes us nervous about changing it. We want to make sure we aren't missing anything.  I also don't like the idea of manually making adjustments to many jobs each month, I am looking for a way to set it up automatically but haven't been able to figure out how. 

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    SUGGESTED

    You've brought up a great question which I will have the same issue.  We are supplementing direct production hours with Subcontractors.  I am thinking I will begin allocating ID costs as a % of Labor and Sub work.  This should smooth out the allocation more evenly across jobs.  If you wanted to do an automatic allocation, only way I am awere of is setting up a "Fringe" in Payroll but that would only be based on direct labor.

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    Right or Wrong I justify not doing anything because subcontractor cost includes burden, fringes, profits of the subcontractor so those jobs are getting hit with indirect costs that way instead of the lower costs of self performance.