Cost of Idle HQ Staff Included in Break-even Point Calculation?

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sweep
Management Consultant
Please let me know whether we should add the cost of the idle staff, not directly related to a project, when they are sitting in HQ, in the fixed cost to find out the BEP of that project. (...) Read more? Sign up for free

  Jaap de Jonge
Editor, Netherlands
 

Include Idle Staff in Break-even Point Analys

The basic principle of a BEP is that you want to give a realistic picture of a project by calculating how long it takes to recover the money that you have invested.
In doing so, you should include all the cost and all revenues that are related to undertaking that project (or not).
Now to your idle staff:
- If this staff is there to be available when needed for this kind of projects, then I think you should include (a reasonable percentage of) their cost. Even if they are probably not needed for this particular project.
- But if they are totally unrelated to a small-scale project and are plain HQ staff, then you shouldn't.

 

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