Understanding the Costing Structure

In payroll, the costing structure is a hierarchical structure which allows you to collate costings by departments, cost centres and employee. From the lowest to the highest level, the costing structure is made up of employee, departments, cost centres and states. You must create at least one entry for each element of the structure, with no upper limit to the entries in each category. 

Costs are normally collated by pay item, then further collated at each level of the costing structure. Thus you can report on costs at the lowest (employee) or highest (state) level, or any level in between. Costs by default are allocated to the employee's home department unless a costing split has been applied to spread costs to other areas of the costing structure as required.

The costing structure also serves other secondary purposes, for example

• General ledger export:In most cases the general ledger structure reflects the costing structure, allowing you to export payroll transactions to your general ledger as required.
• State payroll tax: payments which have been costed to a selected state can be collated in a state payroll tax liability, used to calculate the premium payable in state payroll tax for that state.
• Workers compensation liability: Payments which have been costed to a department can be collated under workplace for the purposes of calculating workcover liability