Labor and Burden Rates

Hi All,

I was wondering if anyone would share how they determine their labor
and burden rates as they relate to costs. I already have my labor and
burden rates on the quoting side. I just want to make sure that the
costing side is as accurate as possible.

The typical way of calculating the cost is the total costs/production

My question is should the production hours be based on labor hours
available, machine hours available, or both.

Available Labor Hours:
Pros: We know how many workers we have, and how often they are here.
Cons: We have less workers than machines. The production hours are
small(er) and therefore the rates are extremely high.

Available Machine Hours:
Pros: Because of the many machines we have the production hours would
be high(er) and therefore low rates.
Cons: We can't possible fill every machine, every hour of the day.

I was thinking maybe it should be based on a combination. ie: how
many machine hours can my workers possibly run.

In the past we have based it on historical performance, but that
builds manufacturing variance right into the rate, because the rates
assume we won't run all machines all the time.

Anyone have any thoughts on this?