This section briefly describes how Oracle Projects calculates costs for expenditures.
Each transaction has two cost amounts when processed, raw and burdened. Oracle Projects calculates these amounts for each detail transaction when you distribute costs using any of the following processes:

• Distribute Labor Costs
• Distribute Usage and Miscellaneous Costs
• Distribute  Expense Report Adjustments
• Distribute Supplier Cost Adjustments
  

The raw cost is the actual cost of the work performed, and the burden cost is the indirect cost of work performed. The burden costs are created to apply overhead costs to projects to provide an accurate total cost figure. The burdened cost is the total cost of the expenditure, or the sum of raw cost and burden cost. Oracle Projects calculates the burden cost using the raw cost and a burden multiplier.

Calculating Labor Cost
The PRC: Distribute Labor Costs process handles labor items using quantity and rates as follows:

• Raw cost is the result of multiplying hours by a rate.
• Burden cost is the result of multiplying raw cost by a burden multiplier.
• Burdened cost is the sum of raw cost and burden cost.

Note: You can define a unique labor costing algorithm using the Labor Costing Extensions

Calculating Cost for Usages, Expense Report and Miscellaneous Transactions
Oracle Projects calculates the cost for usages and miscellaneous transactions as follows:

• Raw cost is equal to quantity (if quantity is in currency, for example, a currency amount), or alternatively, raw cost is the result of multiplying quantity by a rate (if quantity is not in currency). You can define cost rates for usage and miscellenous costs as follows:

•  Burden cost is the result of multiplying raw cost by a burden multiplier.
•  Burdened cost is the sum of raw cost and burden cost.

Calculating Burden Cost and Total Burdened Cost
Oracle Projects calculates burden cost by multiplying raw cost by a burden multiplier.
This calculation is represented in the following formula:
Burden Cost = Raw Cost x Burden Multiplier

Oracle Projects calculates total burdened cost by adding burden cost to the raw cost amount. This calculation is represented in the following formula:
Total Burdened Cost = Raw Cost + Burden Cost
You use the burden multiplier to derive the total amount of the burden cost.

Calculating Cost for Supplier Invoices
Oracle Projects calculates the raw cost for supplier invoices using the cost amount entered as the invoice amount for the invoice in Oracle Payables.

• Raw cost is equal to the supplier invoice amount from Oracle Payables.
• Burden cost is the result of multiplying raw cost by a burden multiplier.
• Burdened cost is the sum of raw cost and burden cost.

Oracle Projects calculates the burdened cost for supplier invoice transactions during the following processes: