The Overhead Allocation Worksheet helps calculate the true cost of servicing your clients.

It works by first adding up the total hours worked by staff members on each client account, using entries from time sheets and time cards. Then the agency’s total overhead is calculated from the income statement. The agency’s total overhead is then divided up by client using one of four formulas: agency direct service costs, agency billings, agency income, or agency direct client hours. Based on the formula you’ve chosen, Clients & Profits allocates each client’s share of the overhead expenses.

At the top of the Overhead Allocation Worksheet report you’ll see the month-to-date total over-head expenses, direct service costs (i.e., staff salaries), net overhead expenses (i.e., total overhead less staff salaries), and total client hours. The report then shows two sections: one for client hours and one for overhead allocation. The ?client hours? section lists clients and their month-to-date total hours, in order by hours used. The ?overhead allocation? section lists clients and their share of the agency’s overhead expenses.



Overhead expenses are allocated based on four different formulas. There are no restrictions on how you use these formulas (for example, you can run four separate reports for same month using each of the four different formulas).

The overhead allocation formulas include:

Agency Direct Service Costs

This popular formula allocates overhead expenses based on the percentage of staff salary dollars used by each client. It looks at the actual cost (using the real payroll amounts, which you enter into the worksheet) of the hours worked on each client by each staff member. It’s the most commonly used method for allocating overhead.

Agency Billings

This formula allocates overhead based on each client’s total billings. For example, if a client represents 50% of the month’s total billings, then half the agency’s expenses are allocated to the client.

Agency Income

This formula allocates overhead based on each client’s gross profit. Unlike the Agency Billings formula, this formula allocates expenses based on the client’s billings less its job costs. With this formula, clients that are more profitable get a higher proportion of the agency’s expenses.

Agency Direct Client Hours

This formula allocates overhead based strictly on the amount of billable hours worked by staff members on each client. Unlike the other formulas, non-billable administrative time is not a factor. Only time added specifically for a client is used. With this formula, clients with the most direct staff hours will get the most allocated overhead.

The amounts in the Overhead Allocation Worksheet report will appear on the Client P&L report. For security reasons, the staff salary and client overhead allocation amounts aren’t saved. Also, they only appear on the overhead allocation worksheet report. The allocation amounts are recalculated each time the worksheet is run.