Question 1

How do you calculate overhead cost per unit?

Accepted Answer

In calculating the overhead cost per unit, all you have to do is divide the total overhead cost by the number of units produced (or you’re planning to produce).

For example, your total overhead cost is $10,000, and you produced 1,000 units, your overhead cost per unit would be $10. That means for every unit you sell, $10 of the price will go towards your operating expenses.

Question 2

What is a good overhead ratio?

Accepted Answer

Overhead ratios will vary from one industry to the next, considering that each faces different expenses. For instance, a good overhead ratio for professional services would be 50%, while a good ratio for retail and restaurant businesses would be 25% and 35%, respectively.

Question 3

What are overhead expenses in healthcare?

Accepted Answer

Medical and healthcare businesses incur around 60% to 70% of their overhead costs. Their most common overhead expenses include:

Staff salary and benefits
Medical equipment
Facility expenses (i.e., rent or mortgage)
Building depreciation
Clinic supplies and fixtures
Malpractice insurances
Promotions and marketing
Professional fees (i.e., accounting, legal, consulting, etc.)
Other insurance policies

Posts Tagged ‘overhead costs’

An Entrepreneur’s Guide to Overhead Costs for Small Businesses