Overhead Rate Calculator

About this calculator

Overhead rate is total overhead ÷ total direct costs (the chosen allocation base) — commonly direct labor hours, direct labor cost, or machine hours — expressing how much indirect cost (rent, utilities, supervision, equipment depreciation) should be layered onto each unit of direct cost when pricing a job or product.

Manufacturers and job-cost contractors use it to make sure quoted prices actually cover the indirect costs of running the shop, not just materials and labor, and cost accountants use the same rate to allocate overhead across products or departments for accurate product-line profitability reporting.