QB Issue Resolution:
I see where you’re headed and what you’re trying to accomplish, so perhaps I can offer some guidance. Sorry if this is wordy, but I like to be thorough and impart understanding. First, take a step back and break this into the proper elements. “Costs” are what you can directly attribute to measurable units (such as a job, an item you manufacture, etc). Ever hear of Cost of Goods Sold or Cost of Sales? “Expenses” are general (administrative, utilities, consumable supplies, etc) and can’t be directly tied to an individual measureable unit. However, it is important to take into account the total administrative effort each job requires on average–over and above the direct costs that were planned for in advance. Look at past months’ Expense sections on each Income Statement (P&L), compare the overal totals for each month with how many jobs were done each month, then average them out, say over a year.
That’s where you’re headed. Now let’s address what you’re trying to accomplish (which pleases this accountant to see someone trying to run their business right). Ultimately, you want to look at the Job Profitability Analysis when the job is closed out and see an accurate picture. The goal, afterall, is to make MONEY, not give it away and let profitability vaporize under your nose. You WILL make a journal entry, contrary to other advice–here’s what you do and WHY you do it: 1.) Create an EXPENSE account called “O/H Pctg to Jobs” or something similar. This will carry a CREDIT balance, as it is intended to offset several or all of your Expenses, and it will maintain a monthly running total of your offsets in one readily-identifiable place. 2.) In your JE window, enter a Debit to a COST account of your 5%–specify your job number–this will increase the COST tied to that job. **Do not select ‘Billable’** 3.) Enter a Credit to the Expense account you created in step one of your 5%, which will lower the total of your Expenses (or Overhead). **The net effect on your Net Income will be zero, as you’ve simply moved an amount to a different location on the same statement. However, when you look at your Job Profitability Analysis, you’ll see it recorded there and will have a more accurate picture of what that job REALLY costs to perform. –>One suggestion: Test out your percentage–I’m not saying it’s right or wrong, just make sure it works.
–>Note to qbteachmt: It frustrates people to no end when they take the time to put them selves out there guidance, only to get responses such as yours. Was it that important for you to speak and be heard? Not only were you grossly incorrect in basically ALL of your points, you spoke out of turn and offered more questions instead of education (as I took the time to do). Your screen name suggests you ‘teach’ QB. As COST Accountant with 17 years of experience, I hope this is not the case. In the event that it is, I happen to make a good living cleaning up the messes caused by advice such as yours–have for over 10 years now.
Resolution for Issue 'Help – 5% Overhead.' available: Yes (Solved).
Source: Intuit Community forum.
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