How Do Labor Cost Transfers Work?

This example shows how labor cost transfers work.

In this example, Amy Green was paid weekly for the period of July 31 to August 6, 2005. Her labor distribution template splits her labor costs between two grants. However, one of the grants expired on August 4 and the template for the new grant was not yet approved when Amy’s payroll was processed. The portion of Amy’s salary that could not be charged to the new grant was charged to her home department. The grant administrator has since approved the new labor distribution template, but now needs to reallocate Amy’s time charged to her department to the new grant.

Two templates applied to Amy’s pay records for July 31 to August 6:

Labor Distribution Template 1 - Effective Date 11/13/2004

Labor Distribution Template 2 - Effective Date 08/04/2005

The existing wage expense distribution records for Amy look like this:

The distributions for August 1 – 3 are correct, but the distributions for August 4 - 5 need to be charged to the new award year. To correct this, the grant administrator created this labor cost transfer template:

Labor Cost Transfer Template - Effective Date 08/04/05 to 08/05/05

The grant administrator processes labor cost transfers with the following results on the existing distributions:

Note that the template is applied to each individual distribution record. The reversing and new records contain the original time record date but are posted using the date specified on the labor cost transfer processing parameters. Transactions are summarized for posting to Project Accounting and General Ledger.