Use Text.StartsWith and List.Contains to efficiently build custom columns

You can just use this formula cmengel if I am reading your requirements correctly:

List.Contains({"A", "S"}, Text.Start([Column1], 1))

That returns a true or false if the text in column1 starts with an A or S, but not an R. So to make it part of your overall function:

#"AddedEXPENSE" =
        Table.AddColumn(
            AddedALLOWED,
            "EXPENSE",
            each
                if
        //  Explicitly define EXPENSE codes
                    List.Contains(
                        {
                            "3L",
                            "3K",
                            "3O",
                            // letter "oh" NOT ZERO!!!
                            "3A",
                            "3E",
                            "3G",
                            "3B",
                            "3F",
                            "3M",
                            "3S",
                            "3J",
                            "3H"
                        },
                        [WO_LABOR_CLASS_CODE]
                    )
                then
                    "Y"
        //  Explicitly define NON-EXPENSE codes
                else if
                List.Contains(
                        {
                            "3C",
                            "3I",
                            "3V",
                            "3P",
                            "3Q",
                            "3N",
                            "3W",
                            "3X"
                        },
                        Text.Start([WO_LABOR_CLASS_CODE], 2)
					)
                then
                    "N"
                else if
                    [WO_LABOR_CLASS_CODE] = "NON_LABOR" then
                    "N"
        //  Catch items that are not explicitly defined or mapped
                else
                    "CLARIFY",
            type text
        ),