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

footage utilization of the primary, process support, and general plant and office
equipment, an annual salary contribution cost is calculated ($6,625).
The final section, Calculated Hourly Burden Rate, takes the calculated values from the
previous sections and calculates the hourly burden rate in three (3) steps: (1) 100%
efficiency and utilization ($30.54/hour); (2) user-defined efficiency with 100% utilization
($35.12/hour); and (3) both user-defined efficiency and utilization ( $38.79/hour).
The majority of primary process equipment groups (e.g., injection molding, aluminum die
casting, forging, stamping and forming) in the manufacturing overhead database are
broken into five (5) to ten (10) burden rate subcategories based on processing complexity
and/or size, as discussed in the manufacturing overhead review. For any given category,
there will often be a range of equipment sizes and associated burden rates which are
averaged into a final burden rate. The goal of this averaging method is to keep the
database compact while maintaining high costing resolution.
In the example of the 500T injection molding press burden rate, the calculated rate
($38.79) was averaged with three (3) other calculated rates (for 390T, 610T and 720T
injection mold presses) into a final burden rate called “Injection Molding, Medium Size
and/or Moderate Complexity.” The final calculated burden rate of $50.58/hour is used in
applications requiring injection molding presses in the range of 400-800 tons.
The sample calculation of the manufacturing overhead rate for an injection molding
machine above is a simple example highlighting the steps and parameters involved in
calculating overhead rates. Regardless of the complexity of the operation or process, the
same methodology is employed when developing overhead rates.
As discussed, multiple methods of arriving at burden rates are used within the cost
analysis. Every attempt is made to acquire multiple data points for a given burden rate as
a means of validating the rate. In some cases, the validation is accomplished at the final
rate level and in other cases multiple pieces of input data, used in the calculation of a rate,
are acquired as a means of validation.
C.4.5 Mark-up (Scrap, SG&A, Profit, ED&T)
C.4.5.1 Overview
All mark-up rates for Tier 1 and Tier 2/3 automotive suppliers referenced throughout the
cost analysis can be found in the Mark-up Database, except in those cases where unique
component tolerances, performance requirements, or some other unique feature dictates a
special rate. In cases where a mark-up rate is “flagged” within the costing worksheet, a
note is included which describes the assumption differences justifying the modified rate.
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