Overhead Archives | Value Investing - Business and Economic Principles

Overhead

Overhead costs are general in nature and usually involve those costs associated with the front office. These include the payroll associated with the office, secretary, bookkeeper, cleaning staff etc. Other overhead costs include rent, utilities at the office, professional services from the lawyer (not contract related), the accountant, banking fees, office supplies, postage, and marketing.

Estimating in Construction – Part IV (Concepts, Tenets, and Principles)

Construction Industry Standards / By David J Hoare MSA / 07/02/2020 02/27/2022

Well developed, accurate and timely estimates are the best tool ensuring profitability in the construction industry. No other internal control mechanism is as valuable to the contractor as the estimate. Good estimating systems in construction provide the management team with the necessary confidence to make long-term decisions benefiting all parties involved with the company. Customers receive a higher quality structure with less warranty requirements, employees get a sense of security with their tenure, and vendors/subcontractors acquire desirable relationships with their contractor assuring delivery of best practices for their respective trades. Simple put, good estimates deliver profits to the contractor.

Overhead – General Definition

Terminology / By David J Hoare MSA / 08/26/2018 02/27/2022

Those costs not directly tied to the production of revenue are referred to as overhead costs.

Gross Profit Margin

Business Ratios / By David J Hoare MSA / 01/02/2017 03/03/2022

The difference between the sales price and the cost of the product or service rendered is known as gross profit margin in business. It is traditionally the amount identified on the income statement or a tax return as the amount earned after cost of sales a.k.a cost of goods sold, cost of services rendered, etc. is subtracted from sales (revenue).

Markup Percentage for Remodelers

Construction Industry Standards / By David J Hoare MSA / 05/20/2015 01/23/2022

In the construction industry, remodelers face a different set of criteria than your traditional new home builder. Because of these issues the markup percentage on costs is generally much higher than other forms of construction. If you are a remodeler, you need to understand the impact of these issues and how to properly markup your job to cover all your indirect and overhead costs.

Restaurant Profit and Loss Statement – Best Format to Use

Food Service Industry / By David J Hoare MSA / 01/19/2015 02/27/2022

A well organized and understandable restaurant profit and loss statement can provide infinite value to a restaurant owner. The best format to use allows the owner to understand his prime costs, total variable costs and the required contribution number necessary to cover fixed costs and desired profit.

How to Calculate the Best Markup for a Construction Project

Construction Industry Standards / By David J Hoare MSA / 02/11/2013 02/27/2022

Every construction project has costs beyond the direct costs and the contractor wants to earn a profit. To cover these costs he must have an appropriate markup. The contractor must give consideration to many variables and circumstances to calculate the best markup for a construction project. To determine the best markup percentage on costs, the contractor should consider his indirect costs, overhead, taxes, and final profit desired.

Best Format for the Construction Profit and Loss Statement

Construction Industry Standards / By David J Hoare MSA / 01/29/2013 02/27/2022

Construction Company Profit and Loss Statement

As a construction company owner, you need a profit and loss statement that conveys information in a format that will identify how much you are truly making as a profit. The best format is a construction profit and loss statement identifying contract revenues, direct costs, indirect costs and the overhead expenses. This format most closely matches the estimating style of most small construction companies.

At the end of the day, it is about the profit you make with your company. This format will point out where the problem is located and where the best performance occurs. When I look at a P&L, I want to quickly identify issues and concerns and get them addressed. If you use this format along with the project accounting reports I illustrate in other articles, not only will you quickly discover any problems, but you can actually pin point the underlying issues and get them resolved. This will add thousands of dollars to your bottom line. So as you read this article, remember you are trying to improve that bottom line, this format is absolutely the best tool to achieve that goal.