Calculating overhead percent
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Using this method, overhead percent is calculated as the company's total
operating cost (not including employer-paid payroll taxes or discretionary bonuses) minus direct
project labor, DPE, and direct project expenses divided by the direct
labor cost plus DPE.
For example, if the total cost for the company before employer-paid payroll taxes and bonuses
is $150,000, the direct labor is $50,000, the DPE costs are $16,000, and
direct expenses are $10,000, the overhead cost is:
$150,000
- ($50,000 + $10,000 + $16,000) = $74,000
The overhead percent is:
$74,000
/ ($50,000 + $16,000) = 112.12%
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Calculating overhead
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The overhead amount that is added to your project labor cost is calculated
as follows:
(Cost
Amount + DPE) x Overhead Percent
For example, if the cost is $300, the DPE amount is $96, and the overhead
percent is 112.12%, then:
($300
+ $96) x 112.12% = $444
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Calculating burden
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Burdened project cost is calculated as follows:
Cost
Amount + DPE Amount + Overhead Amount
For example, if the cost amount is $300, the DPE amount is $96.00, and
the overhead amount is $444, then burdened project cost is:
$300
+ $96 + $444 = $840
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