Fixed Overhead Recovery

The simplest Fixed Overhead Recovery Rate to use is the percent calculated using the break-even sales amount. This Rate ensures that the fixed overhead will be recovered on each job that is bid and awarded. The important point to remember is not whether you are using the right percent. The important point is to use an overhead recovery rate that, over the period, whether it is a month or a year, is absorbed by the jobs completed and in process. In other words, use a rate that ensures that all the jobs worked on in a period cover the fixed overhead.