About using fixed percentages only
Fixed percentages are your best estimates of direct personnel expense
(DPE) and overhead percentages. This method produces a more uniform calculation
of DPE and overhead costs than the cost- and hours-based methods because
it is unaffected by direct labor costs or hours.
DPE
If you want to track DPE separately, use the following formula to calculate
the percent and enter it in the > Setup > Company > Preferences > Payroll
tab > DPE % field. If you have different percents
by department, perform the calculation for each department and enter it
in the > Setup > Company> Departments > DPE % field.
Calculating DPE percent
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Typically, DPE percent is calculated as the total annual staff-related
benefits cost divided by the total direct salary costs.
For example, if the direct salary cost is $50,000 and the benefits cost
is $16,000, the DPE percent is:
$16,000
/ $50,000 = 32.00%
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Calculating DPE
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The DPE amount added to your project labor cost is calculated as follows:
Cost
Amount x DPE Percent
For example, if the cost is $300 and DPE percent is 32.00%, then:
$300
x 32.00% = $96
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Overhead
With Ajera, you can include your overhead cost when reporting your project
cost. There are two common ways of calculating your overhead percent:
Direct labor + DPE as the base
Use this method if you want to track your DPE separately from your general
overhead expense when viewing project cost and you have entered your DPE
percents.
Note: |
On the Transaction widget, use columns Cost Amount Burdened and Cost + Premium Amount Burdened. |
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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Direct labor as the base
Use this method if you do not want to track your DPE separately from
your general overhead expense when viewing project cost.
Note: |
On the Transaction widget, use columns Cost + DPE + Overhead and Cost + Premium Cost + DPE + Overhead |
Calculating overhead percent
|
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 and direct project expenses divided by the direct labor
cost.
For example, if the total cost for the company is $150,000, the direct
labor is $50,000, the direct expenses are $10,000 then the overhead cost
is:
$150,000
- ($50,000 + $10,000) = $90,000
The overhead percent is:
$90,000
/ $50,000 = 80.00%
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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 x Overhead Percent
For example, if the cost is $300 and the overhead percent is 180.00%,
then:
$300.00
x 180.00% = $540
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Calculating burden
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Burdened project cost is calculated as follows:
Cost
Amount + Overhead Amount
For example, if the cost amount is $300 and the overhead amount is $540,
then burdened project cost is:
$300
+ $540 = $840
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