[Code of Federal Regulations]
[Title 48, Volume 7]
[Revised as of October 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR9904.403-60]

[Page 339]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
     CHAPTER 99--COST ACCOUNTING STANDARDS BOARD, OFFICE OF FEDERAL 
           PROCUREMENT POLICY, OFFICE OF MANAGEMENT AND BUDGET
 
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.

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