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You can choose to calculate total burdened costs as a buildup of costs using a precedence of multipliers. Taking the raw cost, Oracle Projects performs a buildup of burden costs on top of raw costs to provide you with a true representation of costs. You provide the multiplier that is used to calculate the cost. The buildup is performed for each detailed transaction. The following example illustrates how Oracle Projects calculates total burdened cost as a buildup of raw and burden costs.

Example of Cost Buildup

Cost Type	Reference	Cost Amount	Formula
Labor	(A)	1,000.00
Overhead @ 95%	(B)	950.00	.95 X A
Total Labor	(C)	1,950.00	A + B
Materials	(D)	500.00
Material Handling @ 15%	(E)	75.00	.15 X D
Total Materials	(F)	575.00	D + E
Total Labor and Materials	(G)	2,525.00	C + F
General & Administrative @ 15%	(H)	378.75	.15 X G
Total Burdened Cost	(I)	2,903.75	G + H

Example

In the example of Cost Buildup and in Figure 1 - 20 below, raw costs are categorized by the cost bases of Labor and Materials. Each raw cost has one or more types of burden cost applied to it to derive the total burdened cost amount. The first-tier multiplier is applied to the raw costs; the second-tier multiplier is applied to the raw costs plus the previous burden cost amount, and so on. In the example above, the multiplier for G&A, which is the second-tier multiplier, is applied to the total raw and burden costs for Labor and Materials.

Examining this example in detail, the raw labor cost of $1,000 is burdened by Overhead at a multiplier of 95 percent, resulting in a burden cost of $950 and a Total Labor cost of $1,950. Next, the raw material cost of $500 is burdened by Material Handling at a multiplier of 15 percent, resulting in a burden cost of $75 and a Total Material costs of $575. Finally, G & A is applied to the total of the buildup of the total burdened costs of Labor and Materials, $2,525, resulting in a total burdened cost amount of $2,903.75, which includes raw and burden costs.

Note the flow in the figure below, which demonstrates the order in which multipliers are applied to raw cost. First Overhead is applied to Labor, then Material Handling is applied to Materials, and so on.