How to Record T&M Premium Labor
How to record the premium portion of overtime labor on Time and Materials (T&M) contracts when specifically authorized.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Accounts Receivable - T&M Billed | Debit | 450.00 | - |
| Direct Labor - T&M Premium | Credit | - | 300.00 |
| Accrued Payroll - Overtime Premium | Credit | - | 150.00 |
💡 Accountant's Note
On T&M contracts, labor is billed at fixed hourly rates. If the contract allows for the reimbursement of overtime premiums, the additional cost must be tracked to ensure it matches the authorized billing rates and FAR 52.222-2 requirements.
Practitioner & Systems Framework
💻 ERP Architecture
Set up a specific labor category code for 'Authorized OT Premium' to distinguish from base labor.
⚠️ Audit Flags
Comparison of billed overtime hours against the 'Overtime Premium' ceiling in the contract.
📄 Required Documentation
Written CO authorization for overtime and certified timesheets showing OT hours.
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Expert Analysis by Qusai Ahmad
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Discussion & Community Questions
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