Costing Setup and Structure

Exo Payroll allows for a very simple or very complex cost centre structure depending on what you require. Numeric codes are used. You can select the levels and possible number of cost centres by the number of digits you use to make up that code number.

Example

Consider a simple costing setup that uses two-digit cost centres. The first digit could represent a Centre, say 1 = Auckland, 2 = Hamilton and so on up to nine centres. The second digit could be used to represent a Work Area like 1 = Office, 2 = Sales, 3 = Dispatch and so on up to nine work areas.

Under this scheme, you would get cost centre code numbers like:

11 = Auckland/Office,

21 = Hamilton/ Office.

13 = Auckland/Dispatch

23 = Hamilton/Dispatch

This two-digit example is used as the basis of the setup instructions below.

Setup

Set up the Structure

The first step is to set up the structure that your payroll company will be using:

On the Utilities menu choose Payroll Setup.
In the Cost Centre Structure section, next to Analysis Code 1, enter "Centre" for the Name and 1 for the Length.
Next to Analysis Code 2, enter a Name of "Work Area" and a Length of 1.

Specify Valid Cost Centres

The second step is to specify the possible valid cost centres for your business, and their names.

On the Maintenance menu choose Cost Centres.
Add codes and descriptions. Note that the codes are two digits, meaning that they have combined the two structures you created in the Payroll Setup

Assign Cost Centres to Employees

The third step is to assign the cost centre to the appropriate employees. You can assign a cost centre to a dollar amount in several ways:

To the employee's default cost centre - thus rendering all pay for that employee to go to the one cost centre
To an individual wage line - useful for job costing or employees who work in various areas of the business
To a shared cost centre for leave
To an allowance

One employee can have several cost centres. You can assign expected proportions of costing for salaried or waged employees by choosing Costing in the Standard Pay screen. The payroll can handle in excess of 10,000 cost centres.

You can capture this information in the Costing Analysis report. Similarly, you can sort most reports by the employee's default cost centre. If necessary you can link a corresponding general ledger account to any given cost centre, for accounting purposes.

Deciding on a Structure

The important issue for each user to decide is, what do you want to analyse in relation to wages and salary paid out?

A restaurant owner may only want to know the wages/salary costs in each restaurant. He would use a single level code, maybe only one digit. If he wanted to know what wages cost in the Kitchen, Waiting, and Administration areas for each restaurant then he would need to include another level in his structure. Maybe one digit for each level, a total of two digits would be sufficient.

Up to 12 digits can be used in the cost centre field to identify centres. These digits can be divided into up to four levels.

For example, you may want to have a cost centre like the following:

Area - Department - Job Type - Job Number

To achieve this you select the number of digits to always represent each level.

For this four level structure, you need to decide on the number of digits likely to be used for each level.

One digit allows up to 9 Cost Centres; two digits allow up to 99; three digits up to 999.

The total digits used must not exceed 12. All digits and all levels do not need to be used.

NOTE: Creating Departments and Cost Centres are two separate issues in Exo Payroll. Departments are used as pay points - a means of grouping employees and being able to report on those groupings and obviously total wages for a department will be reported on those reports.