During the 1970s, Generac expanded its offerings in the portable and recreational vehicle markets, and in the 1980s the company entered the commercial and industrial markets with its backup power generation systems.
Add each cost to determine the labor burden cost of the employee. In this example, assume you pay $2,000 in payroll taxes, $1,000 in insurance, $2,000 in benefits and $5,000 in supplies and other miscellaneous expenses. Add together $2,000, $1,000, $2,000 and $5,000 to get a labor burden cost of $10,000.
For example, ABC Company has total indirect costs of $100,000 and it decides to use the cost of its direct labor as the allocation measure. ABC incurs $50,000 of direct labor costs, so the overhead rate is calculated as:$100,000 Indirect costs. $50,000 Direct labor. The result is an overhead rate of 2:1, or $2 of overhead for every $1 of direct labor cost incurred.Alternatively, if the denominator is not in dollars, then the overhead rate is expressed as a cost per allocation unit.or example, ABC Company has total indirect costs of $100,000 and it decides to use the cost of its direct labor as the allocation measure. ABC incurs $50,000 of direct labor costs, so the overhead rate is calculated as: