General Tab of Overhead Allocation Configuration

Use the General tab to control how overhead expenses are allocated to your regular projects.

Contents

Field	Description
Scope	The procedure that you select tells Vision whether or not to allocate overhead as well as how to allocate the expenses. Select one of the following: Company-wide — Overhead Allocation distributes one pool of overhead to regular projects and tasks to which direct labor or revenue has been charged during the accounting year. Organization — Overhead Allocation distributes separate pools of overhead from non-operating organizations to operating organizations. Vision then distributes overhead to projects and tasks to which direct labor or revenue has been changed during the accounting period. If you select this method, no other information is required for overhead allocation. However, the Basis field can be used by Key Financial Metrics to calculate actual overhead rate and Overhead Rate can be used for burden calculations. Setup is done for each individual organization. None — Vision does not allocate overhead. If you select this option, no other information is required. The remaining fields, except Overhead Rate, are disabled. You can, however, use Overhead Rate for burden calculations. You would usually not allocate overhead if your firm job costs using billing rates. It is rare for a firm to select this method. You would not allocate overhead if your firm job-costs using billing rates or does gross margin reporting (comparing revenue to direct labor, direct expenses, and reimbursable expenses). Deltek recommends that you allocate overhead to analyze project performance.
Method	This field is required if the scope is Company-wide. The method you select determines how Vision allocates expenses. Overhead is the sum of a firm’s indirect expenses, such as vacation pay, sick time, rent, utilities, office supplies, and administration. Normally, you distribute company-wide overhead costs to all regular projects so that each project absorbs a share of the expenses. Select one of the following: Assign — Vision allocates overhead on a year-to-date basis to regular projects based on a specified percentage of each project’s direct labor or revenue, not on the firm’s actual overhead costs. Because you select the specified percentage, this method generates a consistent overhead number. However, the number is not a true overhead number. Prorata (proration) — Vision allocates on a year-to-date basis to regular projects based on a percentage of the firm’s actual year-to-date indirect expenses to each regular project. This method generates a true overhead number but will fluctuate.
Basis	Select one of the following settings: Direct Labor — This indicates that you want to base your overhead allocation on your direct labor, including regular hours and overtime hours. For every dollar of direct labor, a certain percentage of overhead should be assigned. Therefore, more labor-intensive projects receive more overhead. Revenue — This indicates that you want to base your overhead allocation on your revenue. For every dollar of revenue, a certain percentage of overhead should be assigned. Therefore, projects generating more revenue receive more overhead.
Overhead Rate	Enter the default overhead rate to use when assigning overhead. When Vision allocates overhead, it uses this rate for all projects/tasks that do not have a rate defined in Project Info Center. This rate is only used if you are assigning overhead. This overhead rate is also used to calculate burdened rates on all job-to-date labor on project reports that use burdened rates. You do not need to enter decimal points or percent signs. For example, enter 165 for 165%. The overhead rate helps to determine the amount of overhead a project will receive by calculating the amount for every dollar of direct labor and revenue ($1.00 * 165% = 1.65 of overhead). You cannot enter a negative number.
Variance Project	Specify the regular project to which Vision will assign all unallocated overhead. To maintain reconciliation between project costs and general ledger costs, you must define this Overhead Variance Project. This project stores the difference between the total year-to-date overhead assigned to projects (via the assignment method) and the actual total indirect expenses incurred. Use the Overhead Allocation report to gauge the variance and whether the rate should be adjusted. You must enter an overhead variance project when using the Assign method (not for Proration).
Variance Phase	If the variance project has phases, specify the phase to which Vision will assign all unallocated overhead.
Variance Task	If the variance project has tasks, specify the task to which Vision will assign all unallocated overhead.