A year later again and I have found my way here because of the same kind of problem. I manually entered Timesheets for 8 employees, tracked all their hours to varying projects (since we don't use TSheets at this time), ensured i had the "Hourly Cost Rate" at the top of the projects overview page set up for every employee and all it did was populate TIME to the job. 

So now, I am manually going into the Project, clicking on the "Hourly Time Cost" section, opening the report for the month and MANUALLY clicking on every single time entry to update the "Cost" to the "Hourly Time Cost". This is absolutely ridiculous.... why on earth does this feature exist within QBO, with a big giant button at the top of the Projects page to set it up, if it won't pull through the cost. 

Billable or not. $0.00 for cost to every single hour of time. I have 500+ costs to adjust for this for ONE month. Yes, I have sent feedback. Just here to update that in 2022 for anyone coming here, you won't find your answer yet. It has not been solved.