Job Shop Burden Expenses

Direct Burden Expenses

There are expenses that are not included in direct labor costs and material costs known as direct burden expenses. Direct costs are those costs directly involved in the manufacturing of a product. All other direct expenditures can be classified as direct burden expenses.  These include required fixtures, jigs, molds, etc., that have not been included as a direct engineering expense. Typically, marketing, sales, and shipping expenses would be indirect costs unless they are directed at a specific product. For example, if you are doing an advertising campaign for a specific product, this expense would be a direct burden expense.

Indirect Burden Expenses

All expenses, except direct expenses are classified as indirect expenses. This includes administrative expenses and factory overhead expenses. Factory expenses can include many items, such as indirect material, indirect labor, and indirect engineering costs. The office or factory rent, utilities, insurance, and equipment would all be categorized as indirect burden expenses.

There are many different types of indirect burden expenses that you should discuss with your accounting team and make yourself aware of for accurate costing of jobs. MIE Trak ERP is designed to capture these expenses in order to manage your job costs.