Burden Rate

AAA

DEFINITION of 'Burden Rate'

Indirect costs associated with employees, over and above gross compensation or payroll costs. Typical costs associated with the burden rate include payroll taxes, worker's compensation and health insurance, paid time off, training and travel expenses, vacation and sick leave, pension contributions and other benefits. The burden rate provides a truer picture of total labor costs than payroll costs alone.

INVESTOPEDIA EXPLAINS 'Burden Rate'

Many of the costs associated with the burden rate are hidden costs that are not readily apparent. Since 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.

RELATED TERMS
  1. Group Health Insurance Plan

    An insurance plan that provides healthcare coverage to a select ...
  2. Employee Savings Plan

    A pooled investment account provided by an employer that allows ...
  3. Portable Benefits

    Benefits that have been paid into or accrued in an employer-sponsored ...
  4. Accident And Health Benefits

    Fringe benefits provided to employees for sickness, accidental ...
  5. Payroll Tax

    Tax an employer withholds and/or pays on behalf of their employees ...
  6. Expanded Accounting Equation

    The expanded accounting equation is derived from the accounting ...
Related Articles
  1. Payroll Deductions Pay Off
    Retirement

    Payroll Deductions Pay Off

  2. Small Business Tax Obligations: Payroll ...
    Taxes

    Small Business Tax Obligations: Payroll ...

  3. Finding Per Diem Rates
    Budgeting

    Finding Per Diem Rates

  4. Understanding 'Per Diem'
    Budgeting

    Understanding 'Per Diem'

comments powered by Disqus
Hot Definitions
  1. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  4. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  5. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  6. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
Trading Center