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Overhead formula complications

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  • Overhead formula complications

    I need to know that I am using the right formula. Right now, I am using

    Overhead/1400 hrs.(35 weeks)+20/hr(what I am paying myself)

    But I have seen all kinds of hours like for example:
    Overhead/2000 hrs(50 weeks)
    Overhead/1920(48 weeks)

    The fact of the matter is that you can only mow 6 months out the year here in Michigan. Now with that being said, I need a formula that I can be accurately with my overhead cost per hour. Because the truck payment, mortgage/rent, don't stop coming in just because I am not working in the winter. Can someone simplistically break this down for me. I know the website has a estimate calculator but I need something that is a little more simple. Thanks!

  • #2
    If you give me your email I will send you a document I have that may explain a simple formula. Just edit it to your preference, & it should keep you on track.


    • #3
      thank you


      • #4
        Why not take the total hours you work per year and divide them by your total overhead expenses?

        How does that work out when you do it like that?
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        • #5
          You will need to charge $29.71 per hour (for labor alone) during the 1400 hours you work if you intend to pay yourself $20 per hour for the entire year.

          It looks like this:

          -52 weeks in a year = 2080 hours per year.
          -2080 hours x $20 per hour is $41,600 gross income for the year.
          -Since you plan to only work 1400 hours, that entire labor has to be absorbed in the 1400 hours. So you divide $41,600 by 1400 = 29.714285714285714 (or $29.71 if rounded down, $29.72 if rounded up)

          Now this is ONLY the labor costs, not your total overhead costs. To get a true overhead cost, you need to also figure in your equipment costs, advertising costs, etc. In the next day or so I hope to have something simple to figure all this up.


          • #6
            hey breeze, shoot me over the doc. to please I'd like to take a look at it. e-mails in my sig below


            • #7
              Why not take the total hours you work per year and divide them by your total overhead expenses?

              How does that work out when you do it like that?
              Well, I am moving so i don't know what the going rate is around the area. The thing is I only had at the most 4 yards last year.(I wasn't very serious about it)Also, I didn't really keep track of time either, so I kind of did it to my self. So I guess I when I move, I should call 2-3 companies and have them give me an estimate and find the going rate in that area?


              • #8
                Here is a simple calculator

                Here is a simple calculator. See what you think about this. The data is not necessarily accurate but is simply data to make sure the formulas worked.

                1. Start with the first tab on the bottom, Equipment Overhead. Add your equipment names in the red slots, and all the correct figures associated in the green slots. Make sure to place "0" in each green cost slot for each machine you don't have (EXAMPLE: if you don't have more than one trimmer, have no chain saw, etc. type "none" in the red name slot and "0" in each of the green cost slots.)

                2. Now go to the next tab, Employee, Admin and Office Costs. Here fill in the labor for each employee (including yourself). Also fill in a good estimate of your advertising costs, office supplies costs, or any other business related costs.

                3. Now go to the 3rd tab, Final Values, and see your total overhead from several different perspectives.

                **Remember!!** Obey the modification LEGEND or all of the formulas will become corrupt since the formulas depend on data from the other pages to be accurate. DO NOT modify the gray or orange slots!!!!
                Attached Files


                • #9


                  • #10
                    thanks you everybody!!! this information is very helpful!!


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