Standard Overhead Margin Set Up - System Option

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Category-Default Values

Type- Must be Global

This is a percentage of the material cost that will gross up the overall cost of any job. Salesman’s commissions are affected to reflect sharing in the costs of overhead such as utilities. The result does not go to the General Ledger.  Overhead margin may be calculated either on Material or Labor Costs.  If calculated on material, the unit cost is pulled from the inventory to which the line is assigned.  If calculated on labor, the total cost from the regular and extra labor entry (from the job cost or installer record) is used. Overhead Margin may also be calculated by Material and Labor combined. Enter the appropriate value in the space provided. As of version 10.5, changes to this will only be inherited by orders created after the change. To change existing orders, edit overhead in pre-job cost or during job costing.

An Overhead Margin is used to gross up overall cost on any job. This is figured by taking the chosen and dividing it by the difference between 100% and the overhead margin entered. The amount over the true material cost will be posted to job cost along with Freight and Miscellaneous Expenses. This result does not go to the general ledger in any way, but merely goes to job cost information and is calculated against a salesperson's commission.

EXAMPLE:

A $1000.00 job with $500.00 material cost would normally have a 50% profit. If you asked for a 5% overhead margin, we will take the $500.00 cost and divide it by .95 resulting in a $26.32 overhead margin over and above the $500.00 material cost. This will be considered as part of the overall cost and thus reduce the profit margin on this example to 47.37%.