To manage a manufacturing facility, it is important to know your costs, overhead and profit:

• Cost is what you pay for material and is passed on to the client, dollar for dollar.
• Profit is what you expect to clear when all work is complete.
• Overhead is the hardest component to estimate.

 

A.) General Overhead:
Insurances	$
Shop Supplies	$
Small Tools	$
Taxes/Licenses	$
Travel	$
Utilities	$
Miscellaneous	$

 

B.) Selling, General & Administrative Expenses:
Advertising	$
Automotive	$
Bad Debt	$
Charitable Donations	$
Computers/Internet	$
Depreciation Expense	$
Dues & Subscriptions	$
Interest/Bank Charges	$
Office Supplies/Postage	$
Professional Fees	$
Rent Expense	$
Telephone	$
Travel	$
Miscellaneous	$

 

C.) Salaries/Benefits:
Estimating	$
Executive	$
Office	$
Benefits/Taxes	$

 

D.) Selling/delivery:
Repairs & Maintenance	$
Fuel/Oil	$
Miscellaneous	$

 

E.) Total Overhead Cost:
[A +B +C +D]	$

 

F.) Less Overhead assigned to Material Cost:
Material Cost Overhead:	$

 

G.) Total Overhead Cost assigned to Direct Labor:
[E minus F]	$

 

	Scenario 1	Scenario 2	Scenario 3
H.) Estimated Hours of direct labor per year:
I.) Recover applicable overhead cost from direct labor: [G divided by H]	%	%	%
J.) Blended Rate including benefits & taxes:	$	$	$
K.) Overhead Cost for direct labor: [I * J]	$	$	$
L.) Total Labor Cost with overhead, taxes, benefits:	$	$	$

Notes:

1. Typically % is between 75% and 125%. Please check with your accounting professional to confirm values and %.
2. If yearly hours that differ from estimated direct labor hours shown in Scenario #1-2-3:
• below hours will result in a loss or reduction in profit
• hours above will result in extra profit subject to some slight
  overhead costs
3. Overhead assigned to Material Cost, calculate Overhead divides by total material purchases