Overhead Allocation Calculator
Allocate shop overhead by your selected cost driver, then carry the job burden into margin and laser quote review.
Input Parameters
Allocation Summary
Total Overhead
$50,000
Method
Machine Hours
Average per Job
$25,000
Overhead Rate
200%
In this calculation, overhead represents a very large share of the modeled direct costs; consider checking your inputs and exploring potential changes to costs or utilization.
Key Insights
Highest Overhead
Job 2
Allocated: $30,000
Lowest Overhead
Job 1
Allocated: $20,000
Detailed Job Allocations
2 jobs| Job Name | Allocated Overhead | Overhead % | Total Cost | Distribution |
|---|---|---|---|---|
Job 1Lowest | $20,000.00 | 66.7% | $30,000.00 | 40.0% |
Job 2Highest | $30,000.00 | 66.7% | $45,000.00 | 60.0% |
| Total | $50,000.00 | - | $75,000.00 | 100% |
Method Impact Analysis
Comparing allocation methods for: Job 1
| Allocation Method | Allocated Amount | Variance from Average | Visual |
|---|---|---|---|
Machine HoursSelected | $20,000.00 | -4.8% | |
Labor Hours | $20,000.00 | -4.8% | |
Material Cost | $20,000.00 | -4.8% | |
Floor Space | $20,000.00 | -4.8% | |
Equal Split | $25,000.00 | +19.0% |
Tip: Large variances indicate that method selection significantly impacts cost allocation. Choose the method that best reflects your actual cost drivers.
Recommendations & Insights3 review points
Method notes for reviewing the allocation
- 1
Job 1: Overhead is more than 50% of the modeled total cost in this scenario. Check whether the chosen allocation method and inputs reflect how this job actually consumes resources.
- 2
Job 2: Overhead is more than 50% of the modeled total cost in this scenario. Check whether the chosen allocation method and inputs reflect how this job actually consumes resources.
- 3
Machine hours allocation works well for capital-intensive operations. Ensure accurate time tracking.
Use this overhead allocation calculator as a job costing bridge between total shop overhead, machine-hour assumptions, and the final laser cutting quote. Choose the allocation method, send it to margin and laser quote calculators, then return to the quote packet.
Overhead allocation worksheet: choose the allocation method, send it to margin and laser quote calculators, then return to the quote packet.
Result to use in the quote: allocated overhead per job and overhead rate percent for quote review. Keep the allocation basis visible so the same overhead pool is not counted again inside margin markup.
Use when: multi-machine shops allocating rent, utilities, management, and indirect cost before margin review.
Labor-hour allocation
Labor-hour overhead allocation
Distribute overhead by direct labor hours when workforce mix, supervision, and operator time best explain how indirect cost is consumed.
Machine-hour allocation
Machine-hour overhead allocation
Allocate by machine hours when depreciation, maintenance, utilities, and floor burden follow equipment runtime rather than headcount alone.
Material-value allocation
Material-value overhead allocation
Use material cost as the allocation base when storage, procurement, handling, and inventory burden correlate with material spend on each job.
Allocation Tool: Results depend on method choice. Different methods suit different operations. Review with your accounting standards and cost structure.
Method choice
Choose the overhead allocation method by cost driver
This overhead allocation calculator can allocate by machine hours, labor hours, material cost, floor space, or equal split. Pick the basis that best follows how indirect cost is actually consumed by the job.
Accounting evidence
Source document to collect before quoting
Use the general ledger, rent or lease bill, insurance invoice, utilities, maintenance records, supervisor time, and machine-hour log as the source document to collect before quoting. Avoid burying those costs in a flat markup.
Next quote step
Move allocated overhead into margin review
After allocation, send the result to the laser quote and quotation margin tools so material, time, gas, labor, overhead, and target margin remain visible in the final quote packet.
How overhead allocation works
This tool assigns one overhead pool across jobs using the cost driver you select, so the basis remains visible in the quote review.
Allocated overhead = total overhead × job driver / total driver. The driver can be machine hours, labor hours, material cost, floor space, or an equal split.
The allocation is a planning estimate, not an accounting policy. Reconcile the pool and driver with your ledger and completed-job records before using it for pricing.