Pooling of Costs – Basic Understanding
Pooling of costs is an accounting trick used to facilitate better matching of costs against the respective revenue stream or predicted cost for the respective product or function.
Burden Rate
A burden rate is a value derived against an objective measurement to allocate a pool of costs for a respective function of operations. An accounting trick whereby certain costs of a particular function such as labor or transportation are pooled together and then allocated based on an objective standard such as hours or mileage. This form of reallocation value is referred to as the burden rate.