We used to use a percentage on labor but found that with labor being volatile (often going above or below budget), it was hard to ensure we were accruing enough to cover the expenses. So we setup a model with the percentage of each expense to the cost of the job. I created codes on the job solely for those items and when the job is setup, these accrual codes have budgets representing the total amount of accrual. At the end of each month, I "charge" the job for a portion of the accrual based on the percentage of completion the job is until the accrual codes cost and budget matches (aka, job is complete).
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Stacy Webre
Vice President of Accounting
Lochridge-Priest, Inc.
Waco TX
(254) 772-0670
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Original Message:
Sent: 12-02-2019 08:57
From: Christine Kettelkamp
Subject: Applying indirect costs to projects
We use two dollar values and allocate them for per labor hour, one for employees with trucks, and another for everyone else.
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Christine Kettelkamp CPA, CMA, CCIFP
CFO
Jenco Inc.
Scottsdale AZ
(480) 513-1601
Original Message:
Sent: 11-30-2019 20:51
From: Kathe Barrington
Subject: Applying indirect costs to projects
Most of my electrical contractors use a combination of a dollar value per hour and equipment burden (mainly truck use). Depending on how much is over or under-allocated, we then decide whether we are going to take that back against jobs as a ratio or just keep it in with small jobs and not allocate it. I don't like the use of a percentage rate on labor as labor rates can vary so much.
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Kathe Barrington, CPA
kbarrington.cpa@gmail.com
530-368-1912
Original Message:
Sent: 11-29-2019 10:59
From: Lawrence Horning
Subject: Applying indirect costs to projects
We are an electrical contractor and apply indirect costs (overhead) to job cost based a fixed rate per labor hour. I am interested in hearing how other contractors apply indirect costs, and to what (labor and/or material) and why you use your method.
Thanks.
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Lawrence Horning
Controller
Pieper Electric Inc.
New Berlin WI
(262) 879-8218
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