Entering Personnel as Cost Of Sales (Direct Labor)

QDirect labor employees are those whose salaries are directly related to your revenue. A good example is a restaurant server - These wages are part of the cost of bringing a restaurant's product to its customers.

Adding Personnel as Cost Of Sales (Direct labor):

1

In your financial forecasting tool, Navigate to the  Cost of Sales tab and scroll down to navigate to Direct personnel costs click on the Add Personnel Group option:

2

In the overlay that appears, Enter the  Personnel Group title and click on Save & Next:

3

Add a Personnel into a group: Under a Personnel Group created Click on the Add Personnel option:

TIP: Moving finance items from one group to another is hassle-free. Check out our help guide here.

TIP: Switch finance items between COS and Expenses effortlessly, Click here for more.

4

In the overlay that appears, select whether you're adding an individual employee or a group of employees:

If you chose an Individual option: 

If you chose Group of employees, enter the number of full-time equivalents (FTEs) you'll be hiring:

5

Choose whether you will pay them the same amount each period or a varying amount:

• If you chose Constant amount, enter the amount you'll pay them either per month or per year:

  

  NOTE: Enter the salary you expect to pay for a single full-time individual in this group. The system will multiply this amount by the total number of staff in the group.

  And, indicate whether you want to include annual or monthly raises (and if so, what percent):

  

6

Indicate whether these are on-staff or contract employees:

Enter the percentage of tax & benefits(Burden Rate(%)):

NOTE: The percentage of tax & benefits (burden rate) only applies to on-staff employees; not to contract workers.

6

Turn on the  change to direct cost switch to proceed further.

7

Time Duration: Then indicate when the employee(s) will start/join and terminate his job. Then click on Save. 

By following these steps, you can easily allocate direct labor costs to the Cost of Sales section in your finances. This ensures that your financial forecasting reflects the true cost of production and services, providing you with a clearer financial picture.

Where does this entry appear in the financial statements?

Your Personnel cost of sale will be used to calculate the highlighted lines in the Profit & Loss and Cash Flow table shown below: