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The distribution of manufacturing overhead costs to individual product unit, or production batches generally, requires a base or a cost driver, to which reference a rate, known as material burden rate applies. Material burden is the amount of manufacturing overhead costs that a unit of the base carries.
The fixed cost component of product cost is called the burden rate. In the manufacturing example, the burden rate is computed as follows: $42,000,000 fixed manufacturing costs for period Ã· 120,000 units production output for period. = $350 burden rate.