Pay Period Standard Cost Hours (PR21.3)

Use Pay Period Standard Cost Hours (PR21.3) to define the standard cost hours for full-time accounting.

Standard cost hours are needed to calculate an effective hourly rate, which is used for full-time accounting for government contractors.

Processing Effect

The effective hourly rate is used for calculating and booking costs to project and activity costing for government contractors. Actual costs are booked to Payroll and General Ledger, while the standard cost is booked to .

The difference is booked to GL as pay to actual difference.

The effective hourly rate varies from pay period to pay period for each employee. The effective hourly rate is calculated by using the standard cost hours in the pay period and the actual hours worked in the pay period.

For example, the annual salary is $60,000.00. The standard cost hours for the pay period are 80 hours, yet the employee actually worked 90 hours.

Actual Pay is calculated as follows:

Annual Salary/Pay Periods = Pay period wage. (e.g., 60,000/24 = 2500). For Payroll purposes this is always the same.

Annual Salary/Annual Hours = Hourly rate (e.g., 60,000/2080 = 28.85)

There were 80 pay period hours versus 90 hours worked

Standard Cost Hours * Hourly Rate = Full Time Accounting (e.g., 80 * 28.85 = 2308)

Full Time Accounting / Actual Hours worked = Effective Hourly Rate (e.g. 2308 / 90 = 25.64)

Government contractors need to charge a rate of 25.64 per hour to a project for this pay period veruss traditional methods of charging a project 28.85 per hour.