Using expense pools to recover costs for small tools or equipment

Small tools such as brooms, saws, nail guns, and shovels are always used on projects. Attempting to recover individual costs for small items proves cumbersome. By grouping small tools together into expense pools, you can track the cost for the group of items and post the costs as a direct expense.

In payroll, you can set up a payroll calculation to allocate small tool costs. First, determine the total cost for small tools, including costs for maintenance, during a resource consumption period. Separately, establish the total number of person-hours spent working jobs during the same resource consumption period. Then divide the total of the small tool costs by the total person-hours to determine the hourly cost recovery rate.

To set up an expense pool:

1. Open 5-3-1 Payroll Calculations.

2. Set up a payroll calculation with the following criteria:

3. In the Calculation Method list, click 8-Per Hour (all hours).

4. In the Default Rate cell, enter the cost recovery rate.

5. In the Credit Account cell, enter the Overhead ledger account number to which tool purchases are posted.

6. Update the calculation to all employees.

   When you enter a timecard, Sage 100 Contractor uses the employee’s hours to compute and allocate job costs for the expense pool. The calculation does not affect employee paychecks.

   Tip: By including the per person-hour costs for small tools in estimates, you increase the accuracy of takeoffs.