[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: 48CFR9904.402-60]



[Page 358]

 

            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. 9904.402-60  Illustrations.



    (a) Illustrations of costs which are incurred for the same purpose:

    (1) Contractor normally allocates all travel as an indirect cost and 

previously disclosed this accounting practice to the Government. For 

purposes of a new proposal, contractor intends to allocate the travel 

costs of personnel whose time is accounted for as direct labor directly 

to the contract. Since travel costs of personnel whose time is accounted 

for as direct labor working on other contracts are costs which are 

incurred for the same purpose, these costs may no longer be included 

within indirect cost pools for purposes of allocation to any covered 

Government contract. Contractor's Disclosure Statement must be amended 

for the proposed changes in accounting practices.

    (2) Contractor normally allocates planning costs indirectly and 

allocates this cost to all contracts on the basis of direct labor. A 

proposal for a new contract requires a disproportionate amount of 

planning costs. The contractor prefers to continue to allocate planning 

costs indirectly. In order to equitably allocate the total planning 

costs, the contractor may use a method for allocating all such costs 

which would provide an equitable distribution to all final cost 

objectives. For example, he may use the number of planning documents 

processed rather than his former allocation base of direct labor. 

Contractor's Disclosure Statement must be amended for the proposed 

changes in accounting practices.

    (b) Illustrations of costs which are not incurred for the same 

purpose:

    (1) Contractor normally allocates special tooling costs directly to 

contracts. The costs of general purpose tooling are normally included in 

the indirect cost pool which is allocated to contracts. Both of these 

accounting practices were previously disclosed to the Government. Since 

both types of costs involved were not incurred for the same purpose in 

accordance with the criteria set forth in the Contractor's Disclosure 

Statement, the allocation of general purpose tooling costs from the 

indirect cost pool to the contract, in addition to the directly 

allocated special tooling costs, is not considered a violation of the 

standard.

    (2) Contractor proposes to perform a contract which will require 

three firemen on 24-hour duty at a fixed-post to provide protection 

against damage to highly inflammable materials used on the contract. 

Contractor presently has a firefighting force of 10 employees for 

general protection of the plant. Contractor's costs for these latter 

firemen are treated as indirect costs and allocated to all contracts; 

however, he wants to allocate the three fixed-post firemen directly to 

the particular contract requiring them and also allocate a portion of 

the cost of the general firefighting force to the same contract. He may 

do so but only on condition that his disclosed practices indicate that 

the costs of the separate classes of firemen serve different purposes 

and that it is his practice to allocate the general firefighting force 

indirectly and to allocate fixed-post firemen directly.