Fixed cost per sale rises when completed volume falls. Test a conservative volume scenario before setting prices.
Try this with your own numbersFormula and worked example
Overhead allocation = fixed costs / completed sales
| Input | Example |
|---|---|
| Monthly fixed costs | 6,000 |
| Completed fabrication jobs per month | 60 |
| Calculated result | 100 per sale |
Choose reliable inputs
Plan materials, travel and crew time before committing to a price. For this welding shop calculation, use a completed job sheet, supplier quotes and a crew schedule and a consistent definition of one fabrication job.
- Metal: include the portion belonging to this fabrication job or reporting period, and record where the value came from.
- Consumables: include the portion belonging to this fabrication job or reporting period, and record where the value came from.
- Machine time: include the portion belonging to this fabrication job or reporting period, and record where the value came from.
Use the same currency for every money input. Do not mix weekly costs with monthly revenue, or count the same expense in both an itemised cost and allocated overhead.
What happens when monthly volume falls?
Fixed cost per sale rises when completed volume falls. Test a conservative volume scenario before setting prices.
This simple equal allocation does not capture differences in job duration or resource use.
What if this input changes?
If monthly fixed costs rises by 10%, this example changes by 10 per sale. This shows the effect of one change; it does not predict what will happen.
Open the calculator, save your baseline, then change the input supported by the least reliable estimate in your records. Compare both scenarios before committing to a price or capacity promise.