Overhead expenses
- Thread starter mjc
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mdshunk
Senior Member
- Location
- Right here.
Re: Overhead expenses
Mark up is just what it cost you to order, procure and store the supplied item and other handling charges associated with that item.
Overhead is just a percent added into the per hour cost to the customer. Remember to not forget "non billable time" in the overhead amount, since you might only have 6 billable hours out of every 8 man hours.
Mark up is just what it cost you to order, procure and store the supplied item and other handling charges associated with that item.
Overhead is just a percent added into the per hour cost to the customer. Remember to not forget "non billable time" in the overhead amount, since you might only have 6 billable hours out of every 8 man hours.
hey_poolboy
Senior Member
- Location
- Illinois
Re: Overhead expenses
I was taught a simple method of figuting in OH in college, and it has worked well thus far.
Take one employee for example. His total number of hours will be higher than your billable hours for him.(loading trucks, paper work, etc.)Come to a reasonable conclusion on a number of billable hours per day and multiply it out to hours per year. Then multiply that by the number of employees with billable hours.
Divide your expenses by that number. i.e. insurance premium divided by 1000 hours =
do this with all of your expenses such as phone, cell phones, rent, equipment payments, advertising, etc.
When you find an hourly cost for your expenses and add that to the wage, and add in your proffit percentage you should come up with a reasonable hourly rate that covers you butt, and leaves some in your pocket.
There are other factors that may come into play, such as two seperate departments for service and construction, receptionists and office personel, and all of these may be figured in the same manner.
Sorry for the length.
I was taught a simple method of figuting in OH in college, and it has worked well thus far.
Take one employee for example. His total number of hours will be higher than your billable hours for him.(loading trucks, paper work, etc.)Come to a reasonable conclusion on a number of billable hours per day and multiply it out to hours per year. Then multiply that by the number of employees with billable hours.
Divide your expenses by that number. i.e. insurance premium divided by 1000 hours =
do this with all of your expenses such as phone, cell phones, rent, equipment payments, advertising, etc.
When you find an hourly cost for your expenses and add that to the wage, and add in your proffit percentage you should come up with a reasonable hourly rate that covers you butt, and leaves some in your pocket.
There are other factors that may come into play, such as two seperate departments for service and construction, receptionists and office personel, and all of these may be figured in the same manner.
Sorry for the length.
macmikeman
Senior Member
- Location
- Planet macmikeman
Re: Overhead expenses
Poolboy, that was a good response. Let me add to that, use a good spreadsheet program when figuring up the items as stated above. Linking cells together to allow for adjustments as things change or grow will save you mucho time and energy .
Poolboy, that was a good response. Let me add to that, use a good spreadsheet program when figuring up the items as stated above. Linking cells together to allow for adjustments as things change or grow will save you mucho time and energy .
hey_poolboy
Senior Member
- Location
- Illinois
Re: Overhead expenses
Macmikeman, thanks. I was an accounting major, but couldn't bear the thought of sitting inside at a desk.
I have a spreadsheet made up in excel that I use for just this purpose. It allows you to enter variables in order to see the effect on the bottom line. I even use it to project for the next year based on averages, and percentage increases in insurance, etc.
[ September 10, 2005, 04:19 PM: Message edited by: hey_poolboy ]
Macmikeman, thanks. I was an accounting major, but couldn't bear the thought of sitting inside at a desk.
I have a spreadsheet made up in excel that I use for just this purpose. It allows you to enter variables in order to see the effect on the bottom line. I even use it to project for the next year based on averages, and percentage increases in insurance, etc.
[ September 10, 2005, 04:19 PM: Message edited by: hey_poolboy ]
hey_poolboy
Senior Member
- Location
- Illinois
Re: Overhead expenses
mike, if you PM me your e-mail i'll send you a copy of my Excel spreadsheet.
Michael
mike, if you PM me your e-mail i'll send you a copy of my Excel spreadsheet.
Michael
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