Light Duty Technology Cost Analysis, Power - US Environmental ...

� operating supplies
� perishable and supplier-owned tooling
� all other plant wages (excluding direct, indirect and MRO labor)
� returnable dunnage maintenance (includes allowance for cleaning and repair)
� intra-company shipping costs
As shown in the lists above, burden includes both fixed and variable costs. Generally, the
largest contribution to the fixed burden costs are the investments associated with primary
and process support equipment. The single largest contributor to the variable burden rate
is typically utility usage.
C.4.4.3 Acquiring Manufacturing Overhead Data
Because there is very limited publicly available data on manufacturing overhead rates for
the industry sectors included in this analysis, overhead rates have been developed from a
combination of internal knowledge at FEV and Munro, supplier networks, miscellaneous
publications, reverse costing exercises, and “ground-up” manufacturing overhead
calculations.
For ground-up calculations, a generic “Manufacturing Overhead Calculator Template”
was created. The template consists of eight (8) sections:
� General Manufacturing Overhead Information
� Primary Process Equipment
� Process Support Equipment
� General Plant & Office Hardware/Equipment
� Facilities Cost
� Utilities
� Plant Salaries
� Calculated Hourly Burden Rate.
The hourly burden rate calculation for a 500 ton (T) injection mold machine is used as an
example in the following paragraphs. The General Manufacturing Overhead Information
section, in addition to defining the burden title (Injection Molding, Medium Size and/or
Moderate Complexity) and description (Injection Molding Station, 500T Press), also
defines the equipment life expectancy (12 years), yearly operating capacity (4,700 hours),
operation efficiency (85%), equipment utilization (81.99%) and borrowing cost of money
(8%). These input variables support many of the calculations made throughout the
costing template.
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