Top Tip - Splitting wages in bookkeeping
The identification, measurement and allocation of cost can help calculate the accurate profit margins your business is making - this includes splitting wages between direct and indirect in your bookkeeping.
In particular, it will give you the information regarding your gross profit margin, which is critical to any businesses success.
If wages are to be classified as direct, they should directly relate to sales in the sense that when sales go up these costs should as well and vice versa.
If they are not related to sales and remain fixed, they are indirect wages which mean they are an overhead to the business and there should not be shown in your cost of sales.
If you need help deciding where your wages should go in your bookkeeping, just give us a call and we will do whatever we can do help out.
Call: 01322 555 442