ABSTRACT
This chapter reviews the elements that typically compose a burden or overhead rate. Quite often in the early phases of an estimate, space is required that does not currently exist. Space may be made available by ripping out and rearrangement, rental, or building a new building. The cost engineer is involved in assembling the data required to calculate the overhead rates that are anticipated. Much of the base data are obtained from the accounting department. Calculation of a rate typically requires the prorating of some costs. This means that the base data from accounting must be adjusted for the added costs and anticipated manufacturing direct hours of the new product.
