To allocate overhead, identify all indirect costs associated with running your business (e.g., rent, utilities, administrative expenses) and decide on a method for spreading these costs across jobs. A common approach is the “percentage of labor cost” method, where you calculate overhead as a percentage of total labor costs for each job. Another option is the “rate per labor hour” method, where overhead is applied based on the number of hours worked. Consistently applying the chosen method helps accurately reflect the real cost of each job.