What is the KPI for Service Department Fringe Benefits?

A Contractor University Member recently utilized the Ask-The-Expert Q&A feature within the member dashboard by submitting the following question and received the response below.

Contractor Question:

“Why is the KPI for the service department’s allocated fringe benefits 7%? We are using the calculator on the spreadsheet and it is coming out much higher.”

Contractor University Expert Response:

“The difference lies in what each percentage is based on. The number shown in the calculator reflects allocated fringe benefits as a percentage of the employee’s direct wages, which typically falls in the 30-35% range.

The 7–8% figure, on the other hand, represents allocated fringe benefits as a percentage of total sales.

They just measure from different baselines: one from labor cost, and the other from sales revenue on the departmental P&L.”

Contractor University members can click here to log in to their member dashboard and submit a question through the Ask the Expert portal.

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