Every business leader should probably have at least a rudimentary understanding of accounting. It’s not about becoming an accountant; it’s just about knowing enough not to get fooled or fool yourself.

Allocating direct costs to production is pretty straightforward -- you know what the materials and direct labor costs. The hard part is determining the amount of overhead to allocate to finished goods ...

Overhead allocation in construction is a way to share costs across multiple jobs. Why on earth would you do that? Simple: these are the costs your projects share responsibility for anyway — they’re ...

The most common mistake is allocating overhead as a percentage of job cost. This practice is so universal that we rarely meet a contractor who veers from it. For example, assume a painting contractor ...

Identify cost driver for the overhead cost, and the total amount of cost driver in a multi-product production or multi-service offering. A cost driver is a business activity responsible for change in ...

We lost a little bit, but the job still made money.” As a construction business owner, you know that “making money” at the project level does not necessarily equate to a profit on the project after ...

There are many costs associated with running a business, but all of those costs don’t fall into the same bucket. One type is overhead costs, which are expenses not tied directly to the production of a ...

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and ...

Overhead rate is a measure of a company's indirect costs relative to another input or metric. Learn how overhead rate is calculated and why it's important to track. Overhead rate is a ratio of a ...

Suzanne is a content marketer, writer, and fact-checker. She holds a Bachelor of Science in Finance degree from Bridgewater State University and helps develop content strategies. Investopedia / Paige ...