Every business leader should probably have at least a rudimentary understanding of accounting. It’s not about becoming an accountant; it’s just about knowing enough not to get fooled or fool yourself.

Allocating direct costs to production is pretty straightforward -- you know what the materials and direct labor costs. The hard part is determining the amount of overhead to allocate to finished goods ...

Identify cost driver for the overhead cost, and the total amount of cost driver in a multi-product production or multi-service offering. A cost driver is a business activity responsible for change in ...

Overhead allocation is a source of great disagreement in our industry. Should the allocation be based on job price? On job cost? Per project? Or per field man-hour. We understand the pros and cons of ...

The most common mistake is allocating overhead as a percentage of job cost. This practice is so universal that we rarely meet a contractor who veers from it. For example, assume a painting contractor ...

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and ...