[Code of Federal Regulations]

[Title 48, Volume 7]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 48CFR9904.401-60]



[Page 355]

 

            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM

 

     CHAPTER 99--COST ACCOUNTING STANDARDS BOARD, OFFICE OF FEDERAL 

           PROCUREMENT POLICY, OFFICE OF MANAGEMENT AND BUDGET

 

PART 9904_COST ACCOUNTING STANDARDS--Table of Contents

 

Sec. 9904.401-60  Illustrations.



    (a) The following examples are illustrative of applications of cost 

accounting practices which are deemed to be consistent.



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                                          Practices used in accumulating

 Practices used in estimating costs for  and reporting costs of contract

               proposals                           performance

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1. Contractor estimates an average       1. Contractor records

 direct labor rate for manufacturing      manufacturing direct labor

 direct labor by labor category or        based on actual cost for each

 function.                                individual and collects such

                                          costs by labor category or

                                          function.

2. Contract estimates an average cost    2. Contractor records actual

 for minor standard hardware items,       cost for minor standard

 including nuts, bolts, washers, etc.     hardware items based upon

                                          invoices or material transfer

                                          slips.

3. Contractor uses an estimated rate     3. Contractor accounts for

 for manufacturing overhead to be         manufacturing overhead by

 applied to an estimated direct labor     individual items of cost which

 base. He identifies the items included   are accumulated in a cost pool

 in his estimate of manufacturing         allocated to final cost

 overhead and provides supporting data    objectives on a direct labor

 for the estimated direct labor base.     base.

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    (b) The following examples are illustrative of application of cost 

accounting practices which are deemed not to be consistent.



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                                          Practices used in accumulating

Practices used for estimating costs for  and reporting costs of contract

               proposals                           performance

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4. Contractor estimates a total dollar   4. Contractor accounts for

 amount for engineering labor which       engineering labor by cost

 includes disparate and significant       function, i.e. drafting,

 elements or functions of engineering     designing, production,

 labor. Contractor does not provide       engineering, etc.

 supporting data reconciling this

 amount to the estimates for the same

 engineering labor cost functions for

 which he will separately account in

 contract performance.

5. Contractor estimates engineering      5. Contractor accumulates total

 labor by cost function, i.e. drafting,   engineering labor in one

 production engineering, etc.             undifferentiated account.

6. Contractor estimates a single dollar  6. Contractor records

 amount for machining cost to cover       separately the actual costs of

 labor, material and overhead.            machining labor and material

                                          as direct costs, and factory

                                          overhead as indirect costs.

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