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

Overhead Allocation at 72% overhead scope charged to the quote: a worked example

Here is what the math looks like when conditions slip. We hold every other input steady and drop overhead scope charged to the quote to 72%, then walk the calculation through step by step. Estimate overhead dollars allocated to a quoted job or routing.

The inputs for this scenario

  • Overhead burden rate: 42 $ / hr (held at the documented default)
  • Quoted hours receiving overhead: 310 hr (held at the documented default)
  • Overhead scope charged to the quote: 72 % (the input this scenario stresses; the baseline uses 100)
  • Overhead recovery factor: 92 % (held at the documented default)

Working through the calculation

  • The calculation starts from the formula this tool documents: gross overhead before recovery adjustments = overhead burden rate × quoted hours receiving overhead.
  • allocated overhead dollars works out to 8,624 $ at these inputs, and this is the headline figure for the scenario.
  • gross overhead before recovery adjustments works out to 13,020 $ at these inputs.
  • overhead not charged to the job works out to 3,646 $ at these inputs.
  • overhead recovery at risk works out to 750 $ at these inputs.

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 28% below the baseline at 8,624 $.
  • The practical read: the gap between this scenario and the baseline is entirely attributable to overhead scope charged to the quote, so recovering it is worth quantifying in dollars before considering equipment or staffing changes. 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: 8,624 $ (headline result)
  • gross overhead before recovery adjustments: 13,020 $
  • overhead not charged to the job: 3,646 $
  • overhead recovery at risk: 750 $

Run it with your numbers

  • To rerun this with your own numbers, open the live Overhead Allocation calculator, set overhead scope charged to the quote to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.