48 CFR 9904.414-63 - Effective date.

9904.414-63 Effective date.
This Standard is effective as of April 17, 1992.
Appendix A to 9904.414—Instructions for Form CASB CMF
Purpose
The purpose of this form is to (a) accumulate total facilities capital net book values allocated to each business unit for the contractor cost accounting period, and (b) convert those values to facilities capital cost of money factors applicable to each overhead or G&A expense allocation base employed within a business unit.
Basis
All data pertain to the cost accounting period for which the contractor prepares overhead and G&A expense allocations. The cost of money computations should be compatible with those allocation procedures. More specifically, facilities capital values used should be the same values that are used to generate depreciation or amortization that is allowed for Federal Government contract costing purposes; land which is integral to the regular operation of the business unit shall be included.
Applicable Cost of Money Rate (Col. 1)
Enter here the rate as computed in accordance with 9904.414-50(b).
Accumulation and Direct Distribution of Net Book Value (Col. 2)
Recorded, Leased Property, Corporate.
The net book value of facilities capital items in this column shall represent the average balances outstanding during the cost accounting period. This applies both to items that are subject to periodic depreciation or amortization and also to such items as land that are not subject to periodic write-offs. Unless there is a major fluctuation, it will be adequate to ascertain the net book value of these assets at the beginning and end of each cost accounting period, and to compute an average of those two sets of figures. “Recorded” facilities are the facilities capital items owned by the contractor, carried on the books of the business unit, and used in its regular business activity. “Leased property” is the capitalized value of leases for which constructive costs of ownership are allowed in lieu of rental costs under Government procurement regulations. Corporate or group facilities are the business unit's allocable share of corporate-owned and leased facilities. The net book value of items of facilities capital which are held or controlled by the home office shall be allocated to the business unit on a basis consistent with the home office expense allocation.
Distributed and Undistributed.
All facilities capital items that are identified in the contractor's records as solely applicable to an organizational unit corresponding to a specific overhead, G&A or other indirect cost pool which is used to allocate indirect costs to final cost objectives, are listed against the applicable pools and are classified as “distributed.” “Undistributed” is the remainder of the business unit's facilities capital. The sum of “distributed” and “undistributed” must also correspond to the amount shown on the “total” line.
Allocation of Distributed.
List in the narrative column all the overhead and G&A expense pools to which “distributed” facilities capital items have been allocated. Enter the corresponding amounts in (Col. 2). The sum of all the amounts shown against specific overhead and G&A expense pools must correspond to the amount shown in the “distributed” line.
Allocation of Undistributed (Col. 3)
Business unit “undistributed” facilities are allocated to overhead and the G&A expense pools on any reasonable basis that approximates the actual absorption of depreciation or amortization of such facilities. For instance, the basis of allocation of undistributed assets in each business unit between; e.g., engineering overhead pool and the manufacturing overhead pool, should be related to the manner in which the expenses generated by these assets are allocated between the two overhead pools. Detailed analysis of this allocation is not required where essentially the same results can be obtained by other means. Where the cost accounting system for purposes of Government contract costing uses more than one “charging rate” for allocating indirect costs accumulated in a single cost pool, one representative base may be substituted for the multiplicity of bases used in the allocation process. The net book value of service center facilities capital items appropriately allocated should be included in this column. The sum of the entries in Column 3 is equal to the entry in the undistributed line, Column 2.
A supporting work sheet of this allocation should be prepared if there is more than one service center or other similar “intermediate” cost objective involved in the reallocation process.
Alternative Allocation Process—As an alternative to the above allocation process all the undistributed assets for one or more service centers or similar intermediate cost objectives may be allocated to the G&A expense pool. Consequently, the cost of money for these undistributed assets will be distributed to the final cost objectives on the same basis that is used to allocate G&A expense. This procedure may be adopted for any cost accounting period only when the contracting parties agree (a) that the depreciation or amortization generated by these undistributed assets is immaterial, or (b) that the results of this alternative procedure are not likely to differ materially from those which would be obtained under the “regular” allocation process described previously.
Total Net Book Value (Col. 4)
The sum of Columns 2 and 3. The total of this column should agree with the business unit's total shown in Column 2.
Cost of Money for the Cost Accounting Period (Col. 5)
Multiply the amounts in Column 4 by the percentage rate in Column 1.
Allocation Base for the Period (Col. 6)
Show here the total units of measure used to allocate overhead and G&A expense pools (e.g., direct labor dollars, machine hours, total cost input, etc.). Include service centers that make charges to final cost objectives. Each base unit-of-measure must be compatible with the bases used for applying overhead in the Federal Government contract cost computation. The total base unit of measure used for allocation in this column refers to all work done in an organizational unit associated with the indirect cost pool and not to Government work alone.
Facilities Capital Cost of Money Factors (Col. 7)
The quotients of cost of money for the cost accounting period (Col. 5) separately divided by the corresponding overhead or G&A expense allocation bases (Col. 6). Carry each computation to five decimal places. This factor represents the cost of money applicable to facilities capital allocated to each unit of measure of the overhead or G&A expense allocation base.
Appendix B to 9904.414—Example—ABC Corporation
ABC Corporation has a home office that controls three operating divisions (Business Units A, B & C). The home office includes an administrative computer center whose costs are allocated separately to the business units. The separate allocation conforms to the requirements specified in the Cost Accounting Standard No. 403. Tables I through VI deal with home office expense allocations to business units.
The A Division is a business unit as defined by the CASB, and it uses one engineering and one manufacturing overhead pool to accumulate costs for charging overhead to final cost objectives. In addition, the indirect cost allocation process also uses two “service centers” with their own indirect cost pools: Occupancy and technical computer center.
The costs accumulated in the occupancy pool are allocated among manufacturing overhead, engineering overhead, and the technical computer center on the basis of floor space occupied. The costs accumulated in the technical computer center cost pool are allocated to users on the basis of a CPU hourly rate. Some of these allocations are made to engineering or manufacturing overhead while others are allocated direct to final cost objectives.
At the business unit level, all the indirect expense incurred is regarded either as an engineering or manufacturing expense. Thus the sole item that enters into the business unit G&A expense pool is the allocation received by the A Division from the home office.
Operating results for the A Division are given in Table VII. Facilities capital items for the division are given in Table IX.
The example is based on a single set of illustrative contract cost data given in Table VIII. Since two methods, the “regular” and the “alternative” method, are potentially available for computing cost of money on facilities capital items two sets of different results can be considered.
In addition, total cost input is used in the example as the allocation base for the G&A expense. Two variations of this example have been prepared to illustrate the impact of excluding or including cost of money from total cost input. Variation I, summarized in Table XIII, excludes cost of money from the cost input allocation base. Variation II, summarized in Tables XVII and XVIII, includes cost of money in the cost input allocation base.
Throughout the example, where appropriate, cross references have been made to the text of the relevant parts of the Standard.
Variation I—Total Cost Input Allocation Base Excludes Cost of Money
Table I—Net Book Value of Home Office Facilities Capital
Dec. 31, 1974 Dec. 31, 1975
Administrative computer center facilities capital $550,000 $450,000
Other home office facilities capital 420,000 380,000
Total 970,000 830,000
The assets in the above table generate allowable depreciation or amortization, as explained in Instructions for Form CASB CMF (Basis). Thus they should be included in the asset base for cost of money computation.
Table II—Home Office Facilities Capital Annual Average Balances
Administrative computer center facilities capital $500,000
Other home office facilities capital 400,000
Total 900,000
The above averages are based on data in Table I computed in accordance with the criteria in Instructions for Form CASB CMF (Recorded, Leased Property, Corporate).
$970,000 $830,000=$1,800,00012=$900,000
Table III—Home Office Depreciation and Amortization for 1975
Administrative computer center facilities capital $100,000
Other home office facilities capital 40,000
Total 140,000
Table IV—Allocation of ABC Home Office Expenses to Divisions (Business Units)
Total expense Allocation of business units
A B C
Administrative computer center $1,800,000 $900,000 $900,000
Other home office 4,800,000 2,400,000 1,200,000 1,200,000
Total 6,600,000 3,300,000 2,100,000 1,200,000
The above allocation is carried out in accordance with CAS 403. The expense allocated to individual business units above includes depreciation and amortization as reflected in Table V.
Table V—Depreciation and Amortization Component of ABC Home Office Expense
Total depreciation and amortization expense Allocation of business units
A B C
Administrative computer center $100,000 $50,000 $50,000
Other home office 40,000 20,000 10,000 10,000
Total 140,000 70,000 60,000 10,000
Table VI—Allocation of Home Office Facilities Capital to Business Units
(a) Depreciation and amortization allocation in Table V converted to percentages.
Total depreciation and amoritzation expense (in percent) Allocation of business units (in percent)
A B C
Administrative computer center 100 50 50
Other home office 100 50 25 25
(b) Application of percentages in (a) to average net book values in Table II, in accordance with criteria in Instructions for Form CASB CMF (Recorded, Leased Property, Corporate).
Total net book value Allocation of business units
A B C
Administrative computer center facilities capital $500,000 $250,000 $250,000
Other home office facilities capital 400,000 200,000 100,000 $100,000
Total 900,000 450,000 350,000 100,000
Table VII—“A” Division 1975 Operating Results
Total cost input and other work G.&A. Fixed-price CAS-covered contract Cost reimbursement CAS-covered contracts Commercial and other work
Direct material:
Purchased parts $2,000,000 $100,000 $100,000 $1,800,000
Subcontract items 21,530,000 11,750,000 7,205,000 2,575,000
Total 23,530,000 11,850,000 7,305,000 4,375,000
Director labor and overhead:
Engineering labor 2,000,000 1,500,000 500,000
Engineering overhead (80 pct of direct engineering labor) 1,600,000 1,200,000 400,000
Manufacturing labor 3,000,000 1,200,000 200,000 1,600,000
Manufacturing overhead (200 pct of direct management labor) 6,000,000 2,400,000 400,000 3,200,000
Other direct charges:
Technical computer center direct charge 2,280 h at $250/h 570,000 200,000 370,000
Total cost input (excluding cost of money) 36,700,000 18,350,000 9,175,000 9,175,000
G. & A. (8.99 pct of cost input) 3,300,000 1,650,000 825,000 825,000
Total 40,000,000 20,000,000 10,000,000 10,000,000
Table VIII—Cost Data for the Contract
Purchased parts $85,000
Subcontract items 990,000
Technical computer time 280 h at $250/h 70,000
Engineering labor 330,000
Engineering overhead at 80 pct 264,000
Manufacturing labor 1,210,000
Manufacturing overhead at 200 pct 2,420,000
Total cost input (excluding cost of money) 5,369,000
G & A. at 8.99 pct 483,000
Total cost input and G. & A. (excluding cost of money) 5,852,000
Table IX—Division A Facilities Capital
Average net book values are computed in accordance with Instructions to Form CASB CMF. Average figures only are given, the underlying beginning and ending balances for 1975 have not been reproduced.
Name of indirect cost pool the asset is associated with Average net book value Annual depreciation
Engineering overhead $320,000 $40,000
Manufacturing overhead 4,500,000 900,000
Technical computer center 450,000 90,000
Occupancy 3,000,000 200,000
Facilities capital recorded by division A (see Form CASB CMF instructions for description of recorded) 8,270,000 1,230,000
Allocated from home office, table VI 450,000
Total division A 8,720,000
Table X—Allocation of Undistributed Facilities Capital
(a) Occupancy Pool Assets. Total occupancy pool expenses are assumed to be $1,000,000 of which $200,000 is depreciation per Table IX. Allocation of the $3,000,000 net book value of assets per Table IX is performed on the basis of floor space utilization.
Indirect cost pool Occupancy expense and depreciation allocation Percent of total floor space utilized Asset allocation
Engineering $200,000 20 $600,000
Manufacturing 750,000 75 2,250,000
Technical computer 50,000 5 150,000
Total 1,000,000 100 3,000,000
(b) Technical Computer Center Assets. Total technical computer center expenses for the year are assumed to be $770,000 including $90,000 depreciation per Table IX and $50,000 charge from the occupancy pool per paragraph (a) of this table. A charging rate of $250 per hour is computed assuming a total of 3,080 chargeable CPU hours per annum. The net book value of assets amounting to $600,000 ($450,000 per Table IX plus the $150,000 allocated per (a) above) is allocated on the basis of CPU hours utilized.
Overhead pool or cost objective Hours charged Amount charged Percent Asset allocation
Fixed price contracts, table VII 800 $200,000 26 $156,000
Cost reimbursement contracts, table VII 1,480 370,000 48 288,000
Engineering overhead pool 800 200,000 26 156,000
Total 3,080 770,000 100 600,000
(c) Summary of Undistributed Facilities Capital Allocation. Undistributed (per Table IX).
Technical computer center $450,000
Occupancy 3,000,000
Total 3,450,000
Distribution per paragraph (a) or (b) of this table of balances to overhead pools that result in charges direct to final cost objectives.
Overhead pool (a) (b) Total
Engineering $600,000 $156,000 $756,000
Manufacturing 2,250,000 2,250,000
Technical computer center (direct charge to contracts) 444,000 444,000
Total 2,850,000 600,000 3,450,000
Table XIII—Summary of Cost of Money Computation on Facilities Capital
[Cost of money excluded from total cost input]
Allocation base Allocated to contract, table VIII Computation using regular facilities, capital cost of money factor, table XI Amount Computation using alternative facilities capital, cost of money factor, table XI Amount
1 Hours.
Engineering labor $330,000 0.04304 $14,203 0.0128 $4,244
Manufacturing labor 1,210,000 .18 217,800 .12 145,200
Technical computer time 1 280 15.57895 4,362
Cost input $5,369,000 .00098 5,261 .00850 45,636
Total cost of money on facilities capital 241,626 195,060
Variation II—Total Cost Input Allocation Base Includes Cost of Money
Table XIV—Recomputation of “A” Division Total Cost Input To Reflect Inclusion of Cost of Money
(a) Regular method:
Total cost input per table VII $36,700,000
Cost of money applicable to facilities capital identified with overhead pools per subtotal in column 5, table XV 661,600
Total cost input including cost of money 37,361,600
(b) Alternative method:
Total cost input per table VII 36,700,000
Cost of money applicable to facilities capital identified with overhead pools per subtotal in column 5, table XVI 385,600
Total cost input including cost of money 37,085,900
Table XVII—Summary of Cost of Money Computation on Facilities Capital
[Cost of money included in total cost input—regular method]
Allocation base Allocated to contract, table VIII Computation using regular facilities, capital cost of money factor, table XV Amount
1 Hours.
Engineering labor $330,000 0.04304 $14,203
Manufacturing labor 1,210,000 .18 217,800
Technical computer time 1 280 15.57895 4,362
Cost of money related to overheads 236,365
Cost of money above to be included in cost input 236,365
Cost input, table VIII 5,369,000
Cost input including cost of money 5,605,365 .00096 5,381
Total cost of money on facilities capital 241,674
Table XVIII—Summary of Cost of Money Computation on Facilities Capital
[Cost of money included in total cost input—alternative method]
Allocation base Allocated to contract, table VIII Computation using alternative facilities, capital cost of money factor, table XVI Amount
Engineering labor $330,000 0.0128 $4,224
Manufacturing labor 1,210,000 .12 145,200
Cost of money related to overheads 149,424
Cost of money above to be included in cost input 149,424
Cost input, table VIII 5,369,000
Cost input including cost of money 5,518,424 .00841 46,410
Total cost of money on facilities capital 5,518,424 195,834
[57 FR 14153, Apr. 17, 1992; 57 FR 34081, 34167, Aug. 3, 1992]

Title 48 published on 2014-10-01

no entries appear in the Federal Register after this date.

This is a list of United States Code sections, Statutes at Large, Public Laws, and Presidential Documents, which provide rulemaking authority for this CFR Part.

This list is taken from the Parallel Table of Authorities and Rules provided by GPO [Government Printing Office].

It is not guaranteed to be accurate or up-to-date, though we do refresh the database weekly. More limitations on accuracy are described at the GPO site.


United States Code
U.S. Code: Title 41 - PUBLIC CONTRACTS