Management Accounting for Electrical Contractors
Job Costing, Overhead, Markup, Break-Even and Work in Progress
NFPA 70 National Electrical Code, 2023 edition · Reviewed 2026-09-21
"Management Accounting" sits in Part 1 of both Georgia exams, under "Comply with Administrative Requirements" (4 percent of the exam). Financial accounting (lesson fin-01) reports to outsiders; management accounting is the arithmetic you use to run the company: what each job actually cost, how overhead gets spread, how much to mark up, where the break-even point sits, and whether a job is over- or under-billed.
1. Direct cost, indirect cost and overhead
- Direct costs are identified with one job and charged straight to it — job labor, labor burden on that labor, material, equipment on the job, subcontracts, permits (FAR 31.202).
- Indirect costs (overhead) are what remains after direct costs are assigned: office rent and staff, estimating, insurance, vehicles not charged to a job, utilities, software. They are collected in cost pools and allocated to jobs on a base that measures the benefit each job received — direct labor dollars, labor hours or total cost input (FAR 31.203). A minor-dollar direct cost may be treated as indirect if that is done consistently.
- A job that recovers only its direct costs earns nothing toward overhead; a bid must carry overhead and profit on top of direct cost.
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