price for profit
make sure that you have a detailed and specific understanding of all your potential costs for each Bucket . Yours will be an estimate, so once you get going you will need to use the actual production data and costs. Bucket One: Overhead You probably have a good idea of what your Overhead costs are for your shop. To define these for our purpose, we want to calculate a total for each month per year, all of the recurring costs that are usually about the same every month. Here are some examples:
• Rent or Mortgage • Insurance • Equipment payments • Website • Recurring fees • Phone • Marketing • Waste disposal • Any recurring costs • Salaried employees (if you choose not to put this into the Labor Bucket)
Some of these costs will always be the same, while others may change a little bit from month to month. The idea with this Bucket is that these are costs that are structured that you basically pay all the time, no matter what. Salaried employees are put into the Overhead Bucket by some shops because it’s a controlled expense. They would rather look at their Labor Bucket with only hourly employees included. Others, like the idea that all compensation is included in one Bucket , so they do it differently.
Whatever you choose to do, it doesn’t matter as long as you make your choice consistent.
Personally, I think having salaried employees in the Overhead Bucket works the best because I like to see the fluctuation with the Labor Bucket totals as only representing hourly workers.
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