In this example, multiply $20 per hour by 2,080 hours to get a $41,600 annual payroll labor cost. Add $41,600 and $10,000 to get $51,600. Step 5. Divide your result by the number of actual hours of work per year to calculate the fully-burdened labor cost for the employee. Continuing with the example, divide $51,600 by 1,960 to get a fully-burdened labor cost of $26.33 per hour. This means the total cost to employ your worker is $26.33 per hour of actual work. The two situations in which the burden rate is used are: 1  Labor. 2  Payroll taxes and benefits are added to an employee's wages to arrive at the total cost of labor for that individual. 3  The burden rate is the dollar amount of burden (i.e., overhead) that is applied to one dollar of wages. 1 The burden rate is the dollar amount of burden (i.e., overhead) that is applied to one dollar of wages. 2  For example, if the annual benefits and payroll taxes associated with an individual is $20,000 and his wages are $80,000, then the burden rate is $0.25 per $1.00 of wages. 3  Inventory. 1 Labor. 2  Payroll taxes and benefits are added to an employee's wages to arrive at the total cost of labor for that individual. 3  The burden rate is the dollar amount of burden (i.e., overhead) that is applied to one dollar of wages. The fully burdened cost is the full hourly cost to employ an employee for the hours they actually work, which includes wages and additional costs. By calculating the fully burdened costs, it allows you to make decisions about which projects you can do and how much profitability you want. Add each cost to determine the labor burden cost of the employee. In this example, assume you pay $2,000 in payroll taxes, $1,000 in insurance, $2,000 in benefits and $5,000 in supplies and other miscellaneous expenses. Add together $2,000, $1,000, $2,000 and $5,000 to get a labor burden cost of $10,000.
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fully burdened material cost