Definition of Burden rate:
The burden rate costs are often not readily apparent. Because total labor costs (including the burden rate) may be as much as 50% higher than payroll costs alone, it is necessary to calculate the burden rate accurately to get a better picture of profitability.
Expense or load over and above a standard limit or total, such as employment taxes and employee benefits in excess of salaries and wages.
The burden rate consists of indirect costs associated with employees, or inventory, over and above gross compensation or payroll costs. Typical costs associated with the burden rate include payroll taxes, workers' compensation, health insurance, paid time off, training, travel expenses, vacation and sick leave, pension contributions, and other benefits. The burden rate provides a truer picture of total absorbed costs than payroll costs alone.
How to use Burden rate in a sentence?
- The burden rate refers to the total cost to a company for hiring and maintaining an employee beyond their direct compensation in wages.
- Many costs associated with the burden rate, such as payroll tax and social security deductions, are mandated by the government. Others, such as pension contributions, may be optional.
- Burden rates will include items such as training, fringe benefits, sick leave, and pension contributions, among several others.
Meaning of Burden rate & Burden rate Definition