Contract Manufacturing, Job Shop Quoting & Make-to-Order worked example

Overhead Allocation at 110% overhead scope charged to the quote: a worked example

What does the result look like when overhead scope charged to the quote reaches 110%? The full calculation is worked below with real intermediate numbers. checking whether a quote includes enough burden to recover indirect shop cost

The inputs for this scenario

  • Overhead burden rate: 42 $ / hr (unchanged)
  • Quoted hours receiving overhead: 310 hr (unchanged)
  • Overhead scope charged to the quote: 110 % (raised for this scenario; the documented default is 100)
  • Overhead recovery factor: 92 % (unchanged)

Working through the calculation

  • Applying the documented formula (gross overhead before recovery adjustments = overhead burden rate × quoted hours receiving overhead) to the inputs above produces each figure below.
  • At this operating point the engine returns 13,176 $ for allocated overhead dollars, the number this scenario is built around.
  • At this operating point the engine returns 13,020 $ for gross overhead before recovery adjustments.
  • At this operating point the engine returns -1,302 $ for overhead not charged to the job.
  • At this operating point the engine returns 1,146 $ for overhead recovery at risk.

How this compares with the baseline

  • Against the tool's baseline example, where overhead scope charged to the quote sits at 100% and the headline result is 11,978 $, this scenario comes in 10% above the baseline at 13,176 $.
  • A figure at this level is achievable when overhead scope charged to the quote is genuinely sustained, not just peaked for a shift. It applies a single blended burden rate to hours, so a shop whose overhead is driven by something other than hours, or that has very different overhead intensity by workcenter, may need activity-based allocation instead of one rate.

Results at a glance

  • allocated overhead dollars: 13,176 $ (headline result)
  • gross overhead before recovery adjustments: 13,020 $
  • overhead not charged to the job: -1,302 $
  • overhead recovery at risk: 1,146 $

Run it with your numbers

  • Every input above is editable in the live Overhead Allocation calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.