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Best Practices for Estimating Applied Labor and Overhead Rates

Learn how to successfully estimate overhead rates and labor costs while identifying cost pools.

Accounting regulations require an allocation of costs to construction projects. Often contractors are not sure what costs are to be allocated to jobs. This information will explain in depth how to separate all the relevant construction costs you incur and how to allocate these separate costs as overhead to construction projects. The material will walk through the key cost identification steps in this process and will show you a methodology to use on how to allocate those costs to specific projects. Learn how to identify cost pools to consider for the allocation and discuss various cost pools you can use to allocate as overhead to your projects. This material will walk through a couple of case studies to show you the impact of improper and proper cost allocation as you look to improve the potential profitability on your jobs. This information will provide a clear understanding of the specific costs to allocate to jobs, how those costs can be organized by pools and a methodology you can utilize to improve profitability on all your jobs.

Runtime: 100 minutes
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Why Lorman?

Over 33 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Agenda

Let's Identify the Costs to Be Considered

  • What Are Direct Costs?
  • What Are Indirect Costs?
  • What Are General and Administrative Costs?

What Options Do We Have for Allocating Costs?

  • Why Is an Accurate Budget Important?
    • Analyzes the Relationships Between the Statements Balance Sheet and P&L
    • Financial Integrity Is Key
    • It Is the Report Card
    • Allows You to Fight Your Cost Structure
  • How Do We Identify Cost Pools?
    • Labor
    • Equipment
    • Operating Costs
    • Materials Handling
    • Other
  • Where Are the Challenges?
    • How Do We Apply Profit to Jobs?
    • Understanding Pricing Models
    • Understanding Cost Structure
    • The Dual Overhead Recovery Method

Case Studies

  • Real World Calculations
  • Applying Profit to a Job
  • Summary Work Sheet With Case Studies
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Why Lorman?

Over 33 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Credits

MP3 Download

This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

OnDemand Course

This course was last revised on April 8, 2020.

Call 1-866-352-9540 for further credit information.

This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

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Why Lorman?

Over 33 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Faculty

Theran J. Welsh, CPA

Theran J. Welsh, CPA

SVA Certified Public Accountants

  • Joined the SVA Companies in December 2005 as a lead principal of the construction industry services; a Certified Public Accountant since 1988; founded in 1974, SVA provides audit, accounting, tax and business consulting services to privately owned businesses and to individuals; the form, one of the SVA companies, has offices in Madison, and Milwaukee, Wisconsin
  • Advises construction clients to help them better understand their cost structure, with a specific focus on improving profitability
  • Assists clients in developing cash flow projections, analyzing overhead recovery methods, recommending tax structure, identifying areas of tax exposure, and determining specific opportunities for tax savings
  • Is a past president of the associate members of Associated General Contractors (AGC) of Wisconsin
  • Is a frequent author on industry issues for local and national industry publications
  • Graduate, University of Wisconsin-Madison, team captain on the 1981 UW-Madison NCCAA Champion Hockey Team
  • Can be contacted at 608-831-8181, [email protected] or 1221 John Q. Hammons Drive, Madison, WI 53717
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Product ID: 407341
Published 2020
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