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This document will show by way of example how the costback feature works.
Definition
Costbacks are used to allocate employer shares back to the cost codes based on a pro rated formula.
Example
Employee is paid 430.00 gross, 340.33 net based on these transactions:
| EBD | Amount | G/L Code | |
| 101 | Regular hours | 400.00 | 4000 |
| 102 | Overtime | 30.00 | 4010 |
| 501 | Federal Tax | 60.00 | 2000 |
| 503 | CPP/QPP or FICA | 20.21 | 2010 |
| 504 | EI or FUTA | 9.46 | 2020 |
| 403 | Employer Share for 503 | 20.21 | 4000 |
| 404 | Employer Share for 504 | 13.24 | 4000 |
To costback the employer shares:
1. Accumulate the employer share EBD amounts. (20.21 + 13.24 = 33.45)
2. Pro-rate the earnings:
EBD 101 = 400.00/430.00 = 93%
EBD 102 = 30.00/430.00 = 7%
Assume the costback mask is xxx5. (For an explanation of masking click here)
3. Determine the costback amounts based on the percentages calculated in #2 above.
Amount 1 = 33.45 x .93 = 31.11
Amount 2 = 33.45 x .7 = 2.34
These amounts will be used for the costback g/l codes.
4. Generate the G/L codes based on the g/l codes associated with the earnings code and the costback mask:
4000 + xxx5 = 4005
4010 + xxx5 = 4015
5. Generate the G/L entry:
4005 dr 31.11
4015 dr 2.34
cr-acct cr 33.45
The costback feature works with the employee master file and the earnings or benefits EBD's.
1. The Employee master file
You decide which employees will be costed back via a switch on the switch folder. Only employees whose switch is clicked on will be costed back.
2. The EBD record
The costback switch has two meanings, one for earnings and benefits EBD's, and another for employer share EBD's:
a. Earnings and Benefits EBD's
Costbacks will only apply to earnings and benefits. You will decide when creating an EBD whether the earning will be used in the costback calculation described above. For example you may only want hourly earnings to be used for costback calculations while excluding bonuses. You would then set the switch appropriately for each of the applicable EBD's. This feature allows you to control how your Employer Shares are allocated across the earnings G/L codes.
b. Employer Share EBD's
You will set the costback switch for any employer share EBD that will be costed back. For example, you may only want to cost back statutory employer shares such as CPP/QPP, EI, FICA, or FUTA. Setting the switch on these EBD'S only will include them in the calculation described above. Also, you will define the mask on the employer share EBD.
Last Updated October 20, 2006