How to Allocate equipment use in a project

Question

I have just started to use projects. Allocating payroll, and various expenses are straightforward, but not sure how to go about allocating the use of equipment. Scenerio: I have allocated the total of the drilling service to a project on an invoice. However, the cost of using the backhoe for the job needs to be accounted for. Do I set up each piece of equipment as inventory items? or?

Erzsi_I · Answer

Hi Clint Masse , 
 Thanks for reaching out. From your description, it seems like you're looking for a way to accurately reflect the cost of equipment use, such as a backhoe, on your project invoices. 
 Based on the article content related to allocating revenues and expenses to projects, here's a suggested approach:

Allocate Expenses to Projects : Although the article primarily discusses allocating revenues through the Sales Invoice journal, the principles are similar for expenses. For equipment use, consider setting up each piece of equipment as an expense item rather than inventory. This way, you can allocate the cost directly to the project using the Payables journal.

Creating and Assigning Projects : When entering expenses related to equipment use, double-click in the Projects (or Job Sites) column of the expense entry to allocate it to a specific project. If you're handling costs like drilling services, these can be allocated directly to the project in a similar manner.

Equipment Rental Fees : If applicable, you can use the guidance from the article on charging merchant fees on sales invoices to also consider how to include equipment rental fees. Create a line item for the equipment use or rental fee and manually calculate the cost to be allocated to the project. This ensures that all costs associated with the project are accounted for, providing a clear picture of project expenses.

Ensure Accurate Project Expense Allocation : Make sure to review the allocation by amount or percentage, depending on your settings, to accurately reflect the cost of equipment use in the project's financials. This can be done by going to Setup, Settings, Project (or Job Site), Allocation.

Remember, the key to project accounting in Sage 50 is ensuring that all revenues and expenses are accurately allocated to the correct project. This includes direct costs like payroll and materials, as well as indirect costs like equipment use. 
 If you're looking for more detailed guidance or have specific questions about your scenario, don't hesitate to reach out to Sage support or consult the Sage Knowledgebase for additional resources. 
 Warm Regards, Erzsi

Sage 50

How to Allocate equipment use in a project

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