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Applying Overhead
and Determining
Break-Even Cost
The fifth installment
in a multipart series,
this article examines
how to determine
the break-even cost
for a project.
N ow that weve discussed the list of expenses you must include in any
estimate, its time to add them all up. Before we do, though, we
need to determine what it will take to break even. The break-even
cost for a project is equal to the prime cost plus overhead cost.
Find the prime cost by adding up the cost of labor, material, and direct
job expenses. The following table demonstrates the calculation of esti-
mated prime cost based on previous articles in this magazine.
Continued on page 44
Figure 1