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Fully Burdened Labor Rate Formula:
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The Fully Burdened Labor Rate represents the total cost of an employee per hour, including not only their base wage but also additional costs such as overhead, benefits, and taxes. It provides a comprehensive view of labor expenses for budgeting and project costing.
The calculator uses the formula:
Where:
Explanation: This calculation provides the true cost of labor by accounting for all direct and indirect expenses associated with employing a worker.
Details: Accurate labor rate calculation is essential for proper project budgeting, cost estimation, pricing decisions, and financial planning. It ensures that all labor-related expenses are accounted for in business calculations.
Tips: Enter all values in dollars per hour. Ensure accurate figures for base rate, overhead, benefits, and taxes to get a precise fully burdened labor rate calculation.
Q1: What is included in overhead costs?
A: Overhead typically includes facility costs, utilities, equipment, administrative expenses, and other indirect costs allocated per labor hour.
Q2: How are benefits calculated per hour?
A: Benefits are calculated by dividing total annual benefits cost by the number of productive hours worked per year.
Q3: What taxes are included in the calculation?
A: Employment taxes such as Social Security, Medicare, unemployment insurance, and other payroll taxes are typically included.
Q4: Why is fully burdened rate important for contractors?
A: Contractors use this rate to ensure they're covering all labor costs when bidding on projects and to maintain profitability.
Q5: How often should this calculation be updated?
A: The calculation should be reviewed annually or whenever there are significant changes in wage rates, benefits costs, or tax rates.