Enter your direct labor and your fringe, overhead and G&A pools. You get each indirect rate, the formula behind it, and your wrap rate. It runs in your browser and nothing you type is stored.
Base for fringe. Labor charged directly to contracts.
Payroll taxes, health insurance, paid leave, retirement match.
Indirect costs of the operating unit, such as facilities and indirect labor.
Subcontracts, materials, travel. Adds to the G&A base.
Company-wide management, finance and administration costs.
Runs entirely in your browser. Nothing you enter is sent or stored. This is an estimate for planning, not an audit opinion or agency approval. Pool and base definitions vary by company disclosure statement.
Government contractors price labor with a direct labor rate plus indirect cost rates. Indirect costs are the costs that benefit more than one contract, so they are collected in pools and spread over a base. Each rate is a pool divided by its base. The wrap rate combines them into one multiplier.
A wrap rate is a single multiplier that covers all indirect costs on top of direct labor. It is the fully burdened cost of labor divided by direct labor. A wrap rate of 2.0 means each $1.00 of direct labor costs about $2.00 once fringe, overhead and G&A are included, before any fee or profit.
Formula: wrap rate = (1 + fringe rate) x (1 + overhead rate) x (1 + G&A rate), when overhead is applied to direct labor plus fringe and G&A is applied to total cost input.
Fringe rate = fringe pool / direct labor. The pool holds employer payroll taxes, health insurance, paid leave, retirement contributions and similar benefits.
Overhead rate = overhead pool / overhead base. A common base is direct labor plus fringe. The pool usually holds indirect labor, facilities and other costs of running the unit that does the work.
G&A rate = G&A pool / total cost input. A common total cost input is direct labor plus fringe plus overhead plus other direct costs such as subcontracts, materials and travel. The pool holds company-wide management, finance, legal and administrative costs.
Pool contents and allocation bases vary by company and are set in your disclosure statement and accounting system. Some firms allocate G&A over value added or total cost input with different inclusions, and some use a single overhead rate with no separate fringe. This calculator uses common textbook definitions as a starting point. It is an estimate, not an audit opinion or agency approval, and it is not accounting or legal advice.
A wrap rate is a single multiplier that covers all indirect costs on top of direct labor. It is the fully burdened cost of labor divided by direct labor. If your wrap rate is 2.0, every $1.00 of direct labor costs about $2.00 once fringe, overhead and G&A are included, before any fee or profit.
Fringe rate = fringe pool / direct labor. The fringe pool holds employer payroll taxes, health insurance, paid leave, retirement contributions and similar benefits. If the pool is $250,000 and direct labor is $1,000,000, the fringe rate is 25%.
Overhead rate = overhead pool / overhead base. A common base is direct labor plus fringe. If the overhead pool is $500,000 and direct labor plus fringe is $1,250,000, the overhead rate is 40%.
G&A rate = G&A pool / total cost input. A common total cost input base is direct labor plus fringe plus overhead plus other direct costs such as subcontracts and materials. If the G&A pool is $300,000 and total cost input is $2,000,000, the G&A rate is 15%.
Wrap rate = (1 + fringe rate) x (1 + overhead rate) x (1 + G&A rate), when overhead is applied to direct labor plus fringe and G&A is applied to total cost input. With rates of 25%, 40% and 15%, the wrap rate is 1.25 x 1.40 x 1.15 = 2.0125.
No. It is a planning estimate using standard textbook pool and base definitions. The pools and allocation bases you use should follow your own accounting system and disclosure statement, and they can differ from the ones used here. Rates for a proposal or incurred cost submission should be built from your own books and reviewed by your accountant.
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