To ensure your profitability reports are as accurate as they can be, it’s a good idea to review your employee cost rates regularly.
Employee Cost Rates in Abtrac can be as simple or as flexible as required.
This article explains how to calculate costs, set up default cost rates and how to hide rate details from timesheet users.
Calculating Cost Rate per Chargeable Hour
The Cost Rate per Chargeable Hour is the employee salary rate, plus an overhead allocation, divided by the budgeted chargeable hours that person will work in a year.
Things to consider in your calculation
The accounting applied here is without regard for write-offs which are often also factored into the cost rates.
Obviously individual costs vary per employee. Most business apply a standard cost per grade of employee. This mitigates the likelihood a specific employee will be upset to think a peer is being paid more than them. It also acknowledges the fact that accounting is an art as much as a science and across any financial period productivities will vary and gains and losses will occur over which you have no control.
Detailed example of calculating costs
Total Cost / Chargeable Hours = Cost Rate per Chargeable Hours
110,000/1236 = $89.00
Total Employee Cost = 110,000
| Cost Item | Annual Cost | Comments |
| Annual Salary | 80,000 | Salary, including bonuses |
| Office Overheads | 25,000 | e.g rent, electricity, internet, telephone etc |
| Superannuation Contributions | 4,000 | |
| Training | 1,000 | |
| Other Employee Allowances | ||
| Total Employee Cost | 110,000 |
Total Chargeable Hours = 1236
| Hours Worked | Days per Annum | Comments |
| Weekday Days | 260.70 | Calculated as 365 x (5 / 7) |
| Statutory Holidays | -10.00 | |
| Annual Leave | -20.00 | |
| Sick Leave | -5.00 | |
| Training Days | -5.00 | |
| Total Chargeable Days available | 220.70 | |
| Chargeable Hours available | 1766.00 | Calculated as 8 hours per day x 220.7 days |
| Chargeable Percentage | 70% | less time spent supervising others, personal emails etc |
| Total Chargeable Hours | 1236.00 | Calculated as 70% of Chargeable Hours available |
Where to set default cost rates
Individual Employee Cost rates can be updated from Administration > Employees > Employee Details.
Once changed, the new rates will take effect from when the next new timesheets are entered.
Hiding cost rate details
From Administration >> Employees >> User Group Management, click on the cogwheel button under ‘Manage System Privileges’.
Here, you can choose to show/hide rate details on the timesheet screens for any User Group.
Once edited, this will show up in the ‘Manage User Privileges’ pop-up as below.
If you need to change the rates on a timesheet line
Once a timesheet has been entered, administrators can edit the cost rate for any timesheet line from Bulk Edit Timesheets
Cost rates for overtime
Some reports in Abtrac take into account overtime spent when reviewing costs on a project.
Scaled cost rates spread an employee cost across their actual hours worked, as opposed to cost rates per chargable hour which work with the required hours for the period. You can learn more about scaled cost rates here.
Abtrac KB# 2036