The overhead ratio measures how much of a company's total revenue is spent on indirect costs. This metric is useful for identifying areas where costs can be reduced to improve profitability.

overhead, or insurance), and average cost is the total cost divided by the number of units produced, marginal cost focuses specifically on the expense of producing one more unit. It's not the case ...

To calculate the rate of overhead, divide the indirect costs by the allocation measure you're using. So, the denominator in your formula may be the total number of direct labor hours involved.