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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.
Calculating Material Burden Rate. The general formulae to calculate material burden rate is = budgeted manufacturing overheads / base. The most popular base, is the direct labor cost as a basis, in which case the formulae to calculate the material burden rate reads = budgeted overhead / direct labor cost. If the base is taken as labor hours instead of labor costs, the formulae reads = budgeted manufacturing overheads / direct labor hours.