Labor-Hour Overhead Recovery Rate

Small Electrical Job Markup Pressure

If your electrical contracting business has recurring overhead costs equal to 20% of sales, the markup percentage you must apply to job prices just to recover that overhead is ____% .

An electrical contractor realizes their business overhead is 20% of their total sales. Which of the following best explains why they must apply a 25% overhead recovery markup to their direct job costs rather than just a 20% markup?

You are estimating a residential rewiring project that has $5,000 in direct costs for materials and field labor. Your contracting business has a stated overhead of 20% of sales. To successfully break even on your overhead costs for this job before adding any profit, you should apply an overhead markup of exactly $1,000 to your direct costs.

Analyze the following electrical contracting business scenarios. Sequence them in order from the lowest required overhead recovery markup percentage to the highest required overhead recovery markup percentage.

Evaluate the pricing formulas of four different electrical contractors. Each contractor has stated their recurring business overhead percentage and the markup they apply to their direct job costs. Match each contractor's strategy with the correct assessment of their financial outcome based on the overhead recovery multiplier.