7/28/2019 Managing General Overhead Costs Final Ppt
1/43
Managing General
Overhead CostsGROUP 2:
CASTILLO, CHARISSE A. MARTIN, MARC
MAGBOO, JEMMER M. RAMIREZ, JAMES
LACEBAL, JUAN III
7/28/2019 Managing General Overhead Costs Final Ppt
2/43
Knowledege
Budget
SUCCESS
7/28/2019 Managing General Overhead Costs Final Ppt
3/43
What is General Overhead?
7/28/2019 Managing General Overhead Costs Final Ppt
4/43
Overhead costs that cannotbe charged to a specificconstruction project or
charged to the equipmentsection of the income
statement
HTTP://WWW.CSUN.EDU/~GHE59995/MSE300/CHAPTER%2009%20-
%20MANAGING%20GENERAL%20OVERHEAD%20COSTS.PPT
7/28/2019 Managing General Overhead Costs Final Ppt
5/43
Reasons:
Projection of cash needs
Projection of profits
7/28/2019 Managing General Overhead Costs Final Ppt
6/43
General overhead requires!
7/28/2019 Managing General Overhead Costs Final Ppt
7/43
DAILY VIGILANCE
7/28/2019 Managing General Overhead Costs Final Ppt
8/43
What to Include?Employee Wages and Salaries
Employee Benefits
Employee Retirement
Employee Recruiting
Employee Training
Employee Taxes
Insurance
Interest Expense
http://www.csun.edu/~ghe59995/MSE300/Chapter%2009%20-%20Managing%20General%20Overhead%20Costs.ppt
7/28/2019 Managing General Overhead Costs Final Ppt
9/43
What to Include?Janitorial and Cleaning
Legal and Professional Services
Meals and Entertainment
Office Supplies
Office Purchase
Office Rent
Office Utilities
Postage & Delivery
http://www.csun.edu/~ghe59995/MSE300/Chapter%2009%20-%20Managing%20General%20Overhead%20Costs.ppt
7/28/2019 Managing General Overhead Costs Final Ppt
10/43
What to Include?Publications and Subscriptions
Repairs and Maintenance
Taxes and Licenses
Telephone
Travel
Unallocated Labor
Unallocated Materials
Miscellaneous
http://www.csun.edu/~ghe59995/MSE300/Chapter%2009%20-%20Managing%20General%20Overhead%20Costs.ppt
7/28/2019 Managing General Overhead Costs Final Ppt
11/43
Estimating General OverheadLacebal, Juan III T.
7/28/2019 Managing General Overhead Costs Final Ppt
12/43
Based upon historical costs
Adjusted for inflation
Adjusted for change in businesspractice Company growth New markets
7/28/2019 Managing General Overhead Costs Final Ppt
13/43
Example: Determine the annual
budget for office utilities. Utilitycosts are expected to increase by5% per year due to inflation.
Solution: The total cost of utilitiesfor the past twelve months was
$1745.59. Increasing this by 5%we get $1833. For budgetarypurposes we round this to $1850
7/28/2019 Managing General Overhead Costs Final Ppt
14/43
References:
Construction Accounting & Financial Management, 3/e
Steven Peterson
Chapter 9 Construction Accounting & Financial Management
7/28/2019 Managing General Overhead Costs Final Ppt
15/43
7/28/2019 Managing General Overhead Costs Final Ppt
16/43
7/28/2019 Managing General Overhead Costs Final Ppt
17/43
Vary in linear
Change in direct proportion to the level of
production.
Total variable cost increase when moreunits are produced and decreases
when less units are produced.
Variable cost is constant if expressed on aper unit basis.
7/28/2019 Managing General Overhead Costs Final Ppt
18/43
Example:
Total Variable Cost $10,000 $20,000 $30,000 Units Produced 5,000 10,000 15,000
Variable Cost per Unit $2.00 $2.00 $2.00
7/28/2019 Managing General Overhead Costs Final Ppt
19/43
7/28/2019 Managing General Overhead Costs Final Ppt
20/43
Example:
A company has two salaried employeesworking as estimators, the cost of theseemployees is fixed over the volume ofwork that can be won by the employers.
7/28/2019 Managing General Overhead Costs Final Ppt
21/43
Example:
If a company currently has two officeemployees and rents office space that canaccommodate three employees. the costof office rent is fixed unless the volume ofwork increases such that the companyneeds to hire two or more office
employees. office rent is fixed over therange of the revenues that may besupported by three or less officeemployees.
7/28/2019 Managing General Overhead Costs Final Ppt
22/43
Example:
Total Fixed Cost $30,000 $30,000 $30,000
Units Produced 5,000 10,000 15,000
Fixed Cost per Unit $6.00 $3.00 $2.00
7/28/2019 Managing General Overhead Costs Final Ppt
23/43
7/28/2019 Managing General Overhead Costs Final Ppt
24/43
(semi-variable costs)
Contain both a variable costcomponent and a fixed costcomponent
7/28/2019 Managing General Overhead Costs Final Ppt
25/43
Example:
if a company paid estimators a basesalary plus a bonus based on the volumeof work won, the cost of the estimators isa mixed cost. The salary is a fixed cost,whereas the bonus is a variable cost.
7/28/2019 Managing General Overhead Costs Final Ppt
26/43
http://accountingexplained.com/managerial/cost-behavior/
http://classes.bus.oregonstate.edu/spring-07/ba422/Management%20Accounting
%20Chapter%204.htm
Construction Accounting & FinancialManagement, 3/e (Steve Peterson)
http://accountingexplained.com/managerial/cost-behavior/http://accountingexplained.com/managerial/cost-behavior/http://classes.bus.oregonstate.edu/spring-07/ba422/Management%20Accounting%20Chapter%204.htmhttp://classes.bus.oregonstate.edu/spring-07/ba422/Management%20Accounting%20Chapter%204.htmhttp://classes.bus.oregonstate.edu/spring-07/ba422/Management%20Accounting%20Chapter%204.htmhttp://classes.bus.oregonstate.edu/spring-07/ba422/Management%20Accounting%20Chapter%204.htmhttp://classes.bus.oregonstate.edu/spring-07/ba422/Management%20Accounting%20Chapter%204.htmhttp://classes.bus.oregonstate.edu/spring-07/ba422/Management%20Accounting%20Chapter%204.htmhttp://classes.bus.oregonstate.edu/spring-07/ba422/Management%20Accounting%20Chapter%204.htmhttp://classes.bus.oregonstate.edu/spring-07/ba422/Management%20Accounting%20Chapter%204.htmhttp://classes.bus.oregonstate.edu/spring-07/ba422/Management%20Accounting%20Chapter%204.htmhttp://classes.bus.oregonstate.edu/spring-07/ba422/Management%20Accounting%20Chapter%204.htmhttp://accountingexplained.com/managerial/cost-behavior/http://accountingexplained.com/managerial/cost-behavior/http://accountingexplained.com/managerial/cost-behavior/http://accountingexplained.com/managerial/cost-behavior/http://accountingexplained.com/managerial/cost-behavior/7/28/2019 Managing General Overhead Costs Final Ppt
27/43
Construction Accounting & Financial Management, 3/e
(Steven Peterson), Chapter 9 Construction Accounting
& Financial Management
SAMPLE OF A GENERAL
OVERHEAD BUDGET
7/28/2019 Managing General Overhead Costs Final Ppt
28/43
EXAMPLE 9-3
Prepare a general overhead budget for a company given the following.
The companys revenues are shown below.
7/28/2019 Managing General Overhead Costs Final Ppt
29/43
7/28/2019 Managing General Overhead Costs Final Ppt
30/43
7/28/2019 Managing General Overhead Costs Final Ppt
31/43
7/28/2019 Managing General Overhead Costs Final Ppt
32/43
7/28/2019 Managing General Overhead Costs Final Ppt
33/43
7/28/2019 Managing General Overhead Costs Final Ppt
34/43
7/28/2019 Managing General Overhead Costs Final Ppt
35/43
7/28/2019 Managing General Overhead Costs Final Ppt
36/43
7/28/2019 Managing General Overhead Costs Final Ppt
37/43
SSS Rate:10.40% ofMonthly
SalaryCredit.
7/28/2019 Managing General Overhead Costs Final Ppt
38/43
7/28/2019 Managing General Overhead Costs Final Ppt
39/43
7/28/2019 Managing General Overhead Costs Final Ppt
40/43
Rate at2.5% ofthe basic
monthlysalary
7/28/2019 Managing General Overhead Costs Final Ppt
41/43
7/28/2019 Managing General Overhead Costs Final Ppt
42/43
7/28/2019 Managing General Overhead Costs Final Ppt
43/43
FOR SSS:http://www.sss.gov.ph/sss/printversion.jsp?id=
111&file=regi_contrib_table.htmlhttp://nonoying.com/news/new-sss-
contribution-table-in-june-or-july-2013/FOR PHILHEALTH:http://www.philhealth.gov.ph/circulars/2012/cir
c57_2012.pdf
FOR PAG-IBIG:http://www.pagibigfund.gov.ph/dlforms/provident/03122012/FPF060_Member'sContributionRemittance_V01.pdf
http://www.sss.gov.ph/sss/printversion.jsp?id=111&file=regi_contrib_table.htmlhttp://www.sss.gov.ph/sss/printversion.jsp?id=111&file=regi_contrib_table.htmlhttp://nonoying.com/news/new-sss-contribution-table-in-june-or-july-2013/http://nonoying.com/news/new-sss-contribution-table-in-june-or-july-2013/http://www.philhealth.gov.ph/circulars/2012/circ57_2012.pdfhttp://www.philhealth.gov.ph/circulars/2012/circ57_2012.pdfhttp://www.pagibigfund.gov.ph/dlforms/provident/03122012/FPF060_Member'sContributionRemittance_V01.pdfhttp://www.pagibigfund.gov.ph/dlforms/provident/03122012/FPF060_Member'sContributionRemittance_V01.pdfhttp://www.pagibigfund.gov.ph/dlforms/provident/03122012/FPF060_Member'sContributionRemittance_V01.pdfhttp://www.pagibigfund.gov.ph/dlforms/provident/03122012/FPF060_Member'sContributionRemittance_V01.pdfhttp://www.pagibigfund.gov.ph/dlforms/provident/03122012/FPF060_Member'sContributionRemittance_V01.pdfhttp://www.pagibigfund.gov.ph/dlforms/provident/03122012/FPF060_Member'sContributionRemittance_V01.pdfhttp://www.philhealth.gov.ph/circulars/2012/circ57_2012.pdfhttp://www.philhealth.gov.ph/circulars/2012/circ57_2012.pdfhttp://nonoying.com/news/new-sss-contribution-table-in-june-or-july-2013/http://nonoying.com/news/new-sss-contribution-table-in-june-or-july-2013/http://nonoying.com/news/new-sss-contribution-table-in-june-or-july-2013/http://nonoying.com/news/new-sss-contribution-table-in-june-or-july-2013/http://nonoying.com/news/new-sss-contribution-table-in-june-or-july-2013/http://nonoying.com/news/new-sss-contribution-table-in-june-or-july-2013/http://nonoying.com/news/new-sss-contribution-table-in-june-or-july-2013/http://nonoying.com/news/new-sss-contribution-table-in-june-or-july-2013/http://nonoying.com/news/new-sss-contribution-table-in-june-or-july-2013/http://nonoying.com/news/new-sss-contribution-table-in-june-or-july-2013/http://nonoying.com/news/new-sss-contribution-table-in-june-or-july-2013/http://nonoying.com/news/new-sss-contribution-table-in-june-or-july-2013/http://nonoying.com/news/new-sss-contribution-table-in-june-or-july-2013/http://nonoying.com/news/new-sss-contribution-table-in-june-or-july-2013/http://nonoying.com/news/new-sss-contribution-table-in-june-or-july-2013/http://nonoying.com/news/new-sss-contribution-table-in-june-or-july-2013/http://nonoying.com/news/new-sss-contribution-table-in-june-or-july-2013/http://www.sss.gov.ph/sss/printversion.jsp?id=111&file=regi_contrib_table.htmlhttp://www.sss.gov.ph/sss/printversion.jsp?id=111&file=regi_contrib_table.html