LABOR COST “ACTUAL TO BUDGET” understanding FOS Payroll variances
This week I received this question;
I follow my budgeted payroll hours, but my month end numbers are always different from what shows on the FOS, what causes this?
MORRISON HOURLY PAYROLL ACCOUNTS ONLY
Each week/bi-week hourly payroll amounts are calculated based on worked payroll for the period. Many factors cause variances but the 2 biggest are OVERTIME and ACCRUALS. Morrison sets month end ACCRUALS based on the actual paid payroll for the first pay date in the period. For example, if you have a pay day on the 9th, that amount will be used for the month end accrual rate. Additionally, if you had OVERTIME within the pay period that amount will also set an accrual for OVERTIME even if you do not have any additional worked/paid OVERTIME through the balance of the month.
The key to accuracy in payroll is to recognize the accrual process and of course DO NOT ALLOW OVERTIME without PRIOR approval. Keep in mind that the FOS is an estimated tracking of your accounts FINANCIAL PERFORMANCE
Try the following exercise to assist you with payroll accuracy
Review your Prior month PL Report from the MOMS tab in eMorrison. You can find this report by clicking on MOMS REPORTS, PL REPORTS, MSL Operations, unit with MNC and be sure that your SAP code is visible in the adjacent window.
From your PL Report, total up your hourly payroll, Full time, Part time as well as OT (Do not include the Admin charge in your calculations) Divided this total by the number of days in the reporting month. The sum of this calculation is your actual “daily payroll”. Use this number to compare to your FOS range tracking by service days. If you add up your last month’s actual daily payroll amounts multiplied by the days in your current months FOS range report, the numbers should be very close. Any variance would be from payroll adjustments or payroll accruals. This is a great tool to help predict your actual payroll for the month before viewing it on your month end payroll cost calculation.
Kevin J Mclaughlin | Regional Director of Operations