Expected Cost: Burden
Burden is calculated as an application against labor. A labor variance has an associated burden variance.
The burden values are calculated the same way as labor, except the burden application rate is used. The accumulated quantity is the units reported complete in that operation.
Accumulated Cost: Burden
The accumulated cost for burden is the actual quantity completed multiplied by the actual burden rate.
In the example above the standard setup and run labor rates are both 5.00. The standard setup and run time for operation 10 are both one hour. The machine burden rate in this work center is 1.00/hour. There is no labor burden rate but a 10% of labor cost labor burden%.
In this example setup time was charged 1.5 hours. An easy way to see the burden cost is; the machine at 1.0 per hour burden for a total of 2.5 hours (rather than the standard 2.0); and labor at a burden rate of 0.50 per hour for 2.5 hours for a total burden at operation 10 of 2.5 machine + 1.25 labor or 3.75 total burden, or 0.75 unfavorable to standard. This is also seen in the 2.50 labor usage variance.
Rate Variance Posted: Burden
The burden rate variance for labor is the difference between the work center rate and the actual pay rate multiplied by the actual hours and the labor burden percent.
In the example shown above, operation 20 was performed by an employee earning an above standard pay rate causing the labor rate variance of 2.50. The burden rate variance of 0.25 is related to that labor variance.
Burden Rate Variance Calculation
[(Actual Setup Bdn - Std Setup Bdn) × Actual Setup Hrs] + [(Actual Run Bdn - Std Run Bdn) × Actual Run Hrs]
Where:
Actual Setup Bdn =
(Actual Setup Rate × Lbr Bdn%) + Lbr Bdn Rate + (Mach Bdn Rate × Mach/Op)
Std Setup Bdn =
(Std Setup Rate × Lbr Bdn%) + Lbr Bdn Rate + (Mach Bdn Rate × Mach/Op)
Actual Run Bdn =
(Actual Run Rate × Lbr Bdn%) + Lbr Bdn Rate + Mach Bdn Rate
Std Run Bdn =
(Std Run Rate × Lbr Bdn%) + Lbr Bdn Rate + Mach Bdn Rate
Usage Variance Posted: Burden
The usage variance for burden is the difference between the actual hours and the standard hours multiplied by the work center burden rate. These variances can be calculated at each shop floor transaction: Labor Feedback Work Order (16.20.1), Labor Feedback Employee (16.20.2), Labor Feedback Work Center (16.20.3), or at Work Order Receipt (16.11) or Work Order Receipt Backflush (16.12). When these calculations occur is controlled by Work Order Accounting Control (36.9.11).
In the example above the setup at operation 10 was charged 1.5 hours not the standard 1.0, resulting in a labor usage variance and its corresponding burden usage variance.
