Timekeeping Methodologies

Acceptable Accounting Methods

Total Time Accounting -- Effective Hourly Rate Method

Computing a separate average labor rate for each labor period, based on the salary paid divided by the total hours worked during the period, and distributing the salary cost to all cost objectives worked on during the period based on this rate.

Pro Rata Allocation

Determining a pro rata allocation of total hours worked during the period and distributing the salary cost using the pro rata allocation. For example, if an employee was paid on a weekly basis and worked 25 hours on one cost objective and 25 hours on another cost objective, each cost objective would be charged with one-half of the employee's weekly salary.

Standard Hourly Rate

Computing an estimated hourly rate for each employee for the entire year based on the total hours the employee is expected to work during the year and distributing salary costs to all cost objectives worked on at the estimated hourly rate. Any variance between actual salary costs and the amount distributed is charged/credited to overhead.

Links

http://www.dcaa.mil/cam/Chapter_06_-_Incurred_Costs_Audit_Procedures.pdf