Attachment 11 -- IDCTwoTierExample2.pdf

rb/ts0305

(OVERHEAD/G&A) COLUMN

Labor 515,000$ 400,000$ 25,000$ -$ 90,000$ -$ 515,000$ Vacation 33,475 33,475 33,475 Holidays 22,145 22,145 22,145 Sick Leave 11,330 11,330 11,330 Payroll Taxes 52,500 52,500 52,500 401 (k) Plan 15,000 15,000 15,000 Group Insurance 36,000 36,000 36,000 Materials & Supplies 33,400 28,400 5,000 33,400 Consultants 6,200 5,700 500 6,200 Travel 1,650 1,400 250 1,650 Other Direct Costs 3,050 2,800 250 3,050 Subcontracts 100,000 100,000 100,000 Rent 125,000 125,000 125,000 Utilities 13,200 13,200 13,200 Telephone 6,600 6,600 6,600 Depreciation 22,000 22,000 22,000 Direct Equipment Purchases 10,000 10,000 10,000 Equipment Rental 5,500 5,500 5,500 Expendable Equipment 9,000 9,000 9,000 Repairs & Maintenance 5,500 5,500 5,500 Office Supplies 2,500 2,500 2,500 General Lab Supplies 50,000 50,000 50,000

DIRECT

ACCOUNT AMOUNT

NOTES

INDIRECT

IR&D FRINGE UNALLOW

PROOF

TRIAL BALANCE

123 Easy, Inc.

Indirect Cost Worksheet

Two Tier Example pp Travel 5,000 5,000 5,000 Consultants 4,500 4,500 4,500 Waste Disposal 1,000 1,000 1,000 Training 3,000 3,000 3,000 Legal 30,000 5,000 25,000 30,000 1.

Accounting 15,000 15,000 15,000 Liability Insurance 900 900 900 Interest 11,500 11,500 11,500 2.

Licenses 250 250 250 Dues & Subscriptions 300 300 300 Postage 200 200 200 Recruitment 400 400 400

Trial Balance Total 1,151,100$ 548,300$ 31,000$ 170,450$ 364,850$ 36,500$ 1,151,100$

Fringe Benefit Allocation 132,388 8,274 (170,450) 29,787 - (33.097% of Labor)

Cost Pool Totals 1,151,100$ 680,688$ 39,274$ 0$ 394,637$ 36,500$

NOTES:

1. Legal fees for patent costs unallowable.

2. Interest costs unallowable.

STEPS TO COMPLETING WORKSHEET

1. Get the company trial balance for all expense accounts

2. For each expense account identify costs by cost pool (direct, fringe, etc.)

3. Calculate the fringe benefit rate (see example on "Fringe" sheet)

4. Allocate fringe benefits to each cost pool based on the fringe benefit rate

5. Determine each cost pool and calculate the Indirect rate (see "Indirect" sheet) rb/ts0504

POOL:

Vacation 33,475$ 6.50% Holidays 22,145 4.30% Sick Leave 11,330 2.20% Payroll Taxes 52,500 10.19% 401(k) Plan 15,000 2.91% Group Insurance 36,000 6.99%

TOTAL (A) 170,450$ 33.097%

BASE:

Direct Labor 400,000$ Indirect (Overhead/G&A) Labor 90,000

% OF BASEAMOUNTELEMENT

123 Easy, Inc.

FRINGE BENEFITS

Two Tier Example

IR&D Labor 25,000

TOTAL (B) 515,000$

RATE = (A) / (B) 33.097%

NOTES:

PAID ABSENCES: For informational purposes: 123 Easy's paid absence policy is as follows:

Vacation: 3 weeks or 120 hours Holidays: 10 days or 80 hours Sick Leave: 5 days or 40 hours

123 Easy, Inc.

FRINGE BENEFITS

Two Tier Example rb/ts0305

POOL:

Indirect (Overhead/G&A) Labor 90,000$ 14.17% Indirect Labor Fringe Benefits 29,787 4.69% Rent 125,000 19.69% Utilities 13,200 2.08% Telephone 6,600 1.04% Depreciation 22,000 3.46% Equipment Rental 5,500 0.87% Expendable Equipment 9,000 1.42% Repairs & Maintenance 5,500 0.87% Office Supplies 2,500 0.39% General Lab Supplies 50,000 7.87% Travel 5,000 0.79% Consultants 4,500 0.71% Waste Disposal 1,000 0.16% Training 3,000 0.47% Legal 5,000 0.79% Accounting 15,000 2.36% Liability Insurance 900 0.14% Licenses 250 0.04% Dues & Subscriptions 300 0.05% Postage 200 0.03% Recruitment 400 0.06%

ELEMENT AMOUNT NOTES:% OF BASE

123 Easy, Inc.

Indirect (Overhead/G&A)

Two Tier Example

Recruitment 400 0.06%

TOTAL (A) 394,637$ 62.15%

BASE:(modified direct cost) 1.

Direct Labor 400,000$ Direct Labor Fringe Benefits 132,388 IR&D Labor 25,000 IR&D Fringe Benefits 8,274 Materials & Supplies 33,400 2.

Consultants 6,200 2.

Travel 1,650 2.

Other Direct Costs 3,050 2.

Equipment 10,000 2.

Subcontracts 100,000 2.

SUBTOTAL 719,963$

Equipment (10,000) 1.

Subcontracts > $25,000 (75,000) 1.

TOTAL (B) 634,963$ 1.

RATE = (A) / (B) 62.15%

NOTES:

1. Rate Base Determination: The base is used to allocate Indirect (Overhead/G&A) costs equitably to ALL PROJECTS (Direct, IR&D and Commercial). The base can be direct salaries and wages, direct salaries and wages plus fringe benefits, total direct costs (no exclusions), or modified total direct costs (e.g., total direct costs excluding equipment, total direct costs excluding equipment and subcontract costs in excess of $25,000 per subcontract per project period [as used in this example], etc.). The base an organization chooses to allocate Indirect (Overhead/G&A) costs should result in an EQUITABLE ALLOCATION OF INDIRECT COSTS TO ALL

PROJECTS.

For example; if the organization has a mixture of commercial and NIH awards and the commercial is heavy in materials while the NIH awards are heavy in direct salaries and wages, the base should be total direct costs and not just direct salaries and wages. However, if an organization only had NIH awards which are all heavy in direct salaries and wages than the base could be direct salaries and wages.

2. IR&D: It is NIH's/DHHS's policy to exclude IR&D costs from the Indrect cost pool and include it in the Indirect cost base, thus, these values include element costs relating to both "Direct" and IR&D activities.

123 Easy, Inc.

Indirect (Overhead/G&A)

Two Tier Example