In the webinar Overhead expenses were built into the Employee Unit Cost. However, in the original model this is built into the Unit Price. Mathematically it equates to the same thing, however, from an accounting standpoint it’s more logical to represent only Employee Cost in the Unit Cost and then build Operating Expenses into the Unit Price. What is Unit Cost? Unit Cost should represent the direct Cost of Revenue and as Matt rightly pointed out, salary employees such as Salespeople and or Managers though not directly performing services indirectly contribute to the Revenue via Sales and Management. If we represent Operating Expenses in Unit Cost then we are not truly capturing the COGS and will lose reporting capabilities on different levels of Profit. For example, Gross vs Operating. Therefore, ensure to factor Operating Expenses into the Unit Price NOT the Unit Cost.

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