US Laws, Codes, Statutes & Cases

Title 48: Federal Acquisition Regulations System
PART 9904—COST ACCOUNTING STANDARDS

Browse Previous |  Browse Next

9904.401-60   Illustrations.

(a) The following examples are illustrative of applications of cost accounting practices which are deemed to be consistent.

 ------------------------------------------------------------------------                                          Practices used in accumulating Practices used in estimating costs for  and reporting costs of contract               proposals                           performance------------------------------------------------------------------------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.------------------------------------------------------------------------

 ------------------------------------------------------------------------                                          Practices used in accumulatingPractices used for estimating costs for  and reporting costs of contract               proposals                           performance------------------------------------------------------------------------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.------------------------------------------------------------------------