Labor Budget

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Tab-21 Labor Budget: Pages 30-34.  The first step in the development of a bottom-up Profit Plan is the Labor Budget.  The Labor Budget is composed of time and money (hours and dollars).  The Labor Budget includes all labor-related mandatory and customary benefits.  No overtime is included in the Labor Budget since that would be an undesirable long-term commitment.  If overtime were included in the Labor Budget, the firm would be committed a year in advance to work overtime just to meet its profit target.

Total available hours in the Labor Budget are measured as full-time-equivalents (FTE).  A full-time-equivalent is based on standard hours of 2080 hours per year (40 hours per week times 52 weeks per year).  By using standard hours and full-time-equivalents, the key indicators of financial performance are more comparable among other firms and the same firm from period to period.

Column E Net Revenue Capacity shows the calculated value of Net Revenue per billable staff.  The Total Net Revenue Capacity is compared to Required Net Revenue from the Profit Plan in Tab-22.  The variance between Net Revenue Capacity and Required Net Revenue from the Profit Plan can be adjusted by changing the staff Billing Rate in Column F and/or The Labor Budget Target Utilization Rate in Column G.

The Tab-21 Labor Budget spreadsheet Columns includes Columns for all payroll and payroll related expenses and other employee benefits.  These Columns are grouped in five sections including a Data Entry Area, Time Analysis Hours, Salary and Wage Dollars, Payroll Related Taxes and Expenses and Other Benefits such as Health Insurance and Retirement Plan Contributions and Bonuses. All values except the data entry column values are calculated values using cell formulas.

Column/Description   (to be expanded)
A   Employee Number
B    Employee Name
C    Optional Sort Code
D   Labor Category
E    Net Revenue Capacity
F    Current Billing Rate
G   Plan Target Utilization
H   Current Year-to-date Actual Utilization
I     Prior Year Actual Utilization Rate
J     Prior Year Actual Utilization Rate
K   Calculated DPE Billing Rate
L    Hourly Pay Rate
M   Annual Salary
N   Semi-Monthly Salary
O   Hours Worked Per Day (Average)
P    Hours Worked Per Week
Q   Employee Type: 0=Non-Technical 1=Technical
R    Annual Standard Hours
S    Paid-time-off: Holiday Hours
T    Paid-time-off: Vacation Hours
U   Paid-time-off: Personal/Sick Hours
V   Workers Compensation Insurance Rate
W   Monthly Health Insurance Premium
X   Employee’s Payroll Deduction for Health Insurance (dependent coverage, etc.)
Y   Monthly Disability Insurance Premium
Z    Employee Cell Phone Benefit
AA Mandatory 401K Retirement Plan Contribution
AB Technical Direct Labor Hours
AC Technical Indirect Labor Hours
AD Total Technical Indirect Paid-time-off
AE Total Technical Hours
AF Non-Technical Indirect Hours
AG Non-Technical Indirect Paid-time-off Hours
AH Total Non-Technical Indirect Hours
AI  Total Available Hours
AJ  Total Paid-Time-Off Hours
AK Total Available Hours Less Paid-time-off
AL Annual Base Wage Dollars
AM Estimated for Raises to Annual Base Wage Dollars
AN Total Wages Including Raises Dollars
AO Technical Direct Labor Dollars
AP Technical Indirect Labor Dollars
AQ Total Technical Paid-time-off Dollars
AR Non-technical Indirect Labor Dollars
AS Non-technical Paid-time-off Dollars
AT Total-Non-technical Indirect Labor Dollars
AU Paid-time-off: Holiday Dollars
AV Paid-time-off: Vacation Dollars
AWPaid-time-off: Sick/Personal Dollars
AX Total Wages
AY Total Paid-time-off
AZ Total Wages Less Paid-time-off
BA Employer’s FICA Tax Expense
BB Employer’s Medicare Tax Expense
BC Employer’s FICA and Medicare Tax Expense on Bonuses
BD Federal Unemployment Tax Expense
BE State Unemployment Tax Expense
BF  Workers Compensation Insurance
BG Annual Health Insurance
BH Employee’s Health Insurance Payroll Withholding
BI  Long-Term Disability Insurance
BJ  Discretionary 401k Retirement Plan Contribution
BK Cash Bonus

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