Cost Allocations

[seven-up]

I think this may be going over board to try and figure the overhead cost for real small lawn care business, such as mine. But the past few days I have been wandering about cost allocations and stuff. First off, I think that direct allocation would be the easiest way to go (to lazy to make an excel file for recripical, sequential, etc...) My question is should I use Labor Hours, machine hours, or break that down even further like machine hours for mowers, edgers, etc for using in the allocation per hour. Or is that going to far for a small biz?

And on another note, should the cost be allocated per the lawn care and landscaping parts or just throw them all together since it's all one business? or again is this just going overboard?!?!

Thanks,

John

[Elwood]

John, in the Maint. bus. you are selling TIME.

Figure out costs per MAN hour.


For landscaping, keep is seperate. With landscaping, you have time AND materials that you sell. If you are not careful, the markup on the materials will throw off your numbers for time. Keep your material markup a seperate line on your P&L.

Good Luck!

[Phil Nilsson]

http://www.lawnserviceforum.com/showthread.php?s=&threadid=3131

[seven-up]

thanks for input

john