[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: 48CFR9904.403-60]



[Page 363]

 

            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. 9904.403-60  Illustrations.



    (a) The following table lists some typical pools, together with 

illustrative allocation bases, which could be used in appropriate 

circumstances:



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    Home office expense or function       Illustrative allocation bases

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Centralized service functions:

    1. Personnel administration........  1. Number of personnel, labor

                                          hours, payroll, number of

                                          hires.

    2. Data processing services........  2. Machine time, number of

                                          reports.

    3. Centralized purchasing and        3. Number of purchase orders,

     subcontracting.                      value of purchases, number of

                                          items.

    4. Centralized warehousing.........  4. Square footage, value of

                                          material, volume.

    5. Company aircraft service........  5. Actual or standard rate per

                                          hour, mile, passenger mile, or

                                          similar unit.

    6. Central telephone service.......  6. Usage costs, number of

                                          instruments.

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    (b) The selection of a base for allocating centralized service 

functions shall be governed by the criteria established in 9904.403-

50(b).

    (c) The listed allocation bases in this section are illustrative. 

Other bases for allocation of home office expenses to segments may be 

used if they are substantially in accordance with the beneficial or 

casual relationships outlined in 9904.403-40.



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    Home office expenses or function      Illustrative allocation bases

------------------------------------------------------------------------

Staff management or specific

 activities:

    1. Personnel management............  1. Number of personnel, labor

                                          hours, payroll, number of

                                          hires.

    2. Manufacturing policies, (quality  2. Manufacturing cost input,

     control, industrial engineering,     manufacturing direct labor.

     production, scheduling, tooling,

     inspection and testing, etc.

    3. Engineering policies............  3. Total engineering costs,

                                          engineering direct labor,

                                          number of drawings.

    4. Material/purchasing policies....  4. Number of purchase orders,

                                          value of purchases.

    5. Marketing policies..............  5. Sales, segment marketing

                                          costs.

Central payments or accruals:

    1. Pension expenses................  1. Payroll or other factor on

                                          which total payment is based.

    2. Group insurance expenses........  2. Payroll or other factor on

                                          which total payment is based.

    3. State and local income taxes and  3. Any base or method which

     franchise taxes.                     results in an allocation that

                                          equals or approximates a

                                          segment's proportionate share

                                          of the tax imposed by the

                                          jurisdiction in which the

                                          segment does business, as

                                          measured by the same factors

                                          used to determine taxable

                                          income for that jurisdiction.

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