Understanding Burden Computation Methods

Burden computation methods are used to identify compounding rules for each burden category. Only burden categories with a lower sequence number can be used in the burden computation method for another burden category.

For example, using the same burden categories from the previous segment example, the computation methods for one segment might specify that:

• Raw cost is included in the calculation of fringe.

• Raw cost and fringe are included in the calculation of overhead.

• Raw cost is included in the calculation of material handling.

• Raw cost, fringe, overhead, and material handling are all included in the calculation of general and administrative costs.

For another segment with the same burden categories in the same sequence, the computation methods might specify that:

• Raw cost is included in the calculation of fringe.

• Raw cost is included in the calculation of overhead.

• Raw cost is included in the calculation of material handling.

• For labor-related accounts, raw cost, fringe, and overhead are included in the calculation of general and administrative costs.

• For other direct cost accounts, except materials and subcontracts, raw cost is included in the calculation of general and administrative costs.

• For material and subcontract accounts, material and handling only (not raw cost) is included in the calculation of general and administrative costs.

Note: You can set up different computation methods by account for the same burden category by setting up multiple computation methods for that burden category, and then specifying the computation method for each account range when you set up burden base rules.