In rate analysis, overhead charges (establishment charges) typically include:
Choose the correct answer
Cost of raw materials
Salaries of office staff, rent of contractor office, electricity bills, insurance, and administrative expenses that cannot be directly attributed to a specific work item
Labour wages at site
Plant hire directly on site
Correct Answer
B. Salaries of office staff, rent of contractor office, electricity bills, insurance, and administrative expenses that cannot be directly attributed to a specific work item
Why is this the answer?
Overheads: indirect costs not directly attributable to specific work items. Includes: contractor office expenses, engineer salaries, insurance, bonding, site supervision, quality control, accounting. As a percentage of direct cost: usually 10-15%. Plus profit margin: 5-10%. Together = 15-25% mark-up on direct cost.
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