An expenditure type classifies each detailed transaction according to the type of raw cost incurred.

A burden cost code represents the type of burden costs you want to apply to raw costs. For each burden cost code in the burden structure, you specify what cost base it is applied to, the expenditure type or types it is linked to, and the order in which it is applied to raw costs within the cost base.

A cost base is a grouping of raw costs to which you apply burden costs. A cost base assignment consists of expenditure types. You specify the types of transactions that constitute the cost base when you assign expenditure types to the cost base. These expenditure types assignments represent the raw costs to which you apply the burden costs of the cost base. If you exclude an expenditure type from all cost bases in a structure, the expenditure items that use that expenditure type will not be burdened (burden cost equals zero, thus burdened cost equals raw cost).

In summary, cost bases are comprised of expenditure types and burden cost codes. Expenditure types represent the raw costs, and burden cost codes represent the burden costs that support the raw costs. Cost bases may be different within the context of different burden structures. For example, you may use a different definition of a labor cost base in a billing schedule than you would use in an internal costing schedule.

A burden structure can be additive or precedence based. If you have multiple burden cost codes, an additive burden structure applies each burden cost code to the raw costs in the appropriate cost base. A precedence burden structure is cumulative and applies each cost code to the running total of the raw costs, burdened with all previous cost codes. The examples in the following two tables illustrate how different burden structures using the same cost codes can result in different total burdened costs.

The following table shows the calculation of total burdened cost using the additive burden structure.

Note: The order of the burden cost codes has no effect on the total burdened cost with either additive or precedence burden structures.