defining burden

[pgordon]

I am getting conflicting information on burden. is it part of over head or part of labor cost ? My boss calls burden, truck usage, gas, cell phones,any thing associated with the job.
He calls over head , office staff, electric, heat,office phone. Is this just splitting hairs? I figure labor cost, base wage,taxable fringe benefits, tax & insurance,non taxable fringe benifits to accumilate a total hourly labor cost.
I currently input burden in to over head.

 

[Rewire]

Labor Burden: The costs ? above and beyond gross compensation ? that you incur in order for an employee to perform the work that you hired them to do.

 

[mikeames]

Burden is NOT

truck usage, gas, cell phones,any thing associated with the job.

Thats overhead

Burden is the time spent when a truck gets a flat tire, or running out of material and having to go to the supply house unexpectedly, or the time spent when a tool breaks. Burden is the unplaned cost of day to day operations. Expected costs are overhead.

 

[emahler]

Technically its both.

The taxes are direct labor, only paid if working.

Insurances are overhead, they are paid equal every month no matter how many hours the employee works. Same for trucks, cell phones, etc.

They are all burden, it just depends if for accounting purposes they are direct labor or overhead.

 

[dduffee260]

Insurances are overhead, they are paid equal every month no matter how many hours the employee works. Same for trucks, cell phones, etc.

Not if it is workers compensation, that is based off gross payroll. General Liability is the same every month unless we add or subtract equipment.

To me labor burden is what ever the workers compensation costs along with the FICA taxes and what else we have to match or add to. Usually in this area your labor burden is about 25% of wages. Some other parts may be higher and lower depending on the conditions.

 

[mkgrady]

Whatever is paid as a gross wage (including all deductions) to a worker is a labor expense. Whatever is paid to someone else as a result of that wage is labor burden. Examples would be employer contribution to SS, WC, unemployment, etc. If an employee takes a week off without pay, the labor burden for that week for that employee is zero.

 

[pgordon]

I am tring to generate a true cost for the job at hand. labor and materials , I then pass along the COST of the job to my boss for mark up. I see it as an envestment of money , say $10,000. what he wants to make for a return is realy up to him. 10, 20, 30 % ...... The question is what makes up the true cost of the job. I have no idea what his morgage is or what he pays his secritary. or even the electric bill for that mater.

 

[mkgrady]

I am tring to generate a true cost for the job at hand. labor and materials , I then pass along the COST of the job to my boss for mark up. I see it as an envestment of money , say $10,000. what he wants to make for a return is realy up to him. 10, 20, 30 % ...... The question is what makes up the true cost of the job. I have no idea what his morgage is or what he pays his secritary. or even the electric bill for that mater.

The true cost of the job is the total amount of your contract minus gross profit. Another way to look at it would be to add up all labor, labor burden, materials, equipment rentals, taxes and field overhead. Whatever is left over is gross profit. If you deduct the company overhead allocation for this one job you are now looking at net profit.

 

[pgordon]

Ok , I follow you , I can estimate labor hours , matrials, equipment.and other job related cost, including mobilization and demobilization. but I am still having a hard time understanding burden. say i pay my jw $30 an hour. + vaction,401k,sick time,workmans comp.= a cost of $38 an hour. put togather with all materials, wouldn't that be a true job cost? what am i not seeing ? what is labor burden? It used to be cost plus O & P. What is the diffrence between over head and burden ?

 

[mkgrady]

Ok , I follow you , I can estimate labor hours , matrials, equipment.and other job related cost, including mobilization and demobilization. but I am still having a hard time understanding burden. say i pay my jw $30 an hour. + vaction,401k,sick time,workmans comp.= a cost of $38 an hour. put togather with all materials, wouldn't that be a true job cost? what am i not seeing ? what is labor burden? It used to be cost plus O & P. What is the diffrence between over head and burden ?

Anything that is part of GROSS wages to the employee is labor. Anything the employer pays as a result of labor is burden. ie. SS, WC, unemployment, employer contibution to 401k, etc.

You have overhead even if you let all the employees go. You still have to pay all your companys bills... rent, telephone, electric, truck payments, insurance.

 

[emahler]

Not if it is workers compensation, that is based off gross payroll. General Liability is the same every month unless we add or subtract equipment.

To me labor burden is what ever the workers compensation costs along with the FICA taxes and what else we have to match or add to. Usually in this area your labor burden is about 25% of wages. Some other parts may be higher and lower depending on the conditions.

this is true year to year...but month to month, this stays the same...it won't change until you have your annual audit and they determine your actual payroll for the year...

 

[emahler]

Ok , I follow you , I can estimate labor hours , matrials, equipment.and other job related cost, including mobilization and demobilization. but I am still having a hard time understanding burden. say i pay my jw $30 an hour. + vaction,401k,sick time,workmans comp.= a cost of $38 an hour. put togather with all materials, wouldn't that be a true job cost? what am i not seeing ? what is labor burden? It used to be cost plus O & P. What is the diffrence between over head and burden ?

ok, you pay your JW $30/hr...your vacation, 401k, sick time, WC, etc = $8/hr. His company truck, phone, etc = $5/hr...

you're burden is $13/hr...as all of this is required for him to perform his job....

now some of that burden is 'direct labor cost'...i.e. vacation, 401k, etc...

and some of that burden is 'overhead'...i.e phone, truck, etc....

but it's all labor burden above and beyond his actual cost.

we've historically been in the 20-25% range as well...

 

[dduffee260]

this is true year to year...but month to month, this stays the same...it won't change until you have your annual audit and they determine your actual payroll for the year...

We changed ours last week after we went on a hiring spree to cover the additional expense. But for the most part it does usually stay the same then we have that nasty audit come and take what little money we have away.

 

[emahler]

We changed ours last week after we went on a hiring spree to cover the additional expense. But for the most part it does usually stay the same then we have that nasty audit come and take what little money we have away.

yep...top line looks so good...but after the government and insurance companies take their pieces...bottom line doesn't look so good..