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    Cost Accounting Assignment 2

    Uploaded by

    Haris Khan
    The document provides an example of how to calculate indirect costs as a percentage of total direct costs for a sponsored project award. It gives a sample award with $100,000 total, $20,000 budgeted for equipment, and a 15% indirect cost rate excluding equipment. It then shows the step-by-step calculation and allocation of the direct and indirect costs to ensure they total the full award amount.

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    Cost Accounting Assignment 2

    Uploaded by

    Haris Khan
    28 views1 page
    The document provides an example of how to calculate indirect costs as a percentage of total direct costs for a sponsored project award. It gives a sample award with $100,000 total, $20,000 budgeted for equipment, and a 15% indirect cost rate excluding equipment. It then shows the step-by-step calculation and allocation of the direct and indirect costs to ensure they total the full award amount.

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    Cost Accounting Assignment 2

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    The document provides an example of how to calculate indirect costs as a percentage of total direct costs for a sponsored project award. It gives a sample award with $100,000 total, $20,000 budgeted for equipment, and a 15% indirect cost rate excluding equipment. It then shows the step-by-step calculation and allocation of the direct and indirect costs to ensure they total the full award amount.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    28 views1 page

    Cost Accounting Assignment 2

    Uploaded by

    Haris Khan
    The document provides an example of how to calculate indirect costs as a percentage of total direct costs for a sponsored project award. It gives a sample award with $100,000 total, $20,000 budgeted for equipment, and a 15% indirect cost rate excluding equipment. It then shows the step-by-step calculation and allocation of the direct and indirect costs to ensure they total the full award amount.

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    © All Rights Reserved
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    Cost Accounting Assignment

    Q. How to calculate indirect cost explain with example


    To calculate costs when an award specifies indirect costs as a percentage of total direct
    costs, use the following example.
    Example: Consider a sponsored project award with these instructions:

     The total award is $100,000


     Equipment is budgeted at $20,000
     The indirect cost rate is 15%, excluding equipment

    1. Calculate the amount subject to indirect costs (IDC):

    Total award $100,000

    Minus exclusions
    -$20,000
    (equipment)

    Modified total costs $80,000

    2. Divide the modified total costs by 1.X% (where X=IDC percentage). The result is the
    dollar amount of direct costs.
    o In this example, $80,000 divided by 1.15 equals $69,565 in direct costs.
    3. Subtract direct costs from the modified total costs amount. The result is the dollar
    amount of indirect costs.
    o In this example, $80,000 minus $69,565 equals $10,435 in indirect costs.
    4. Allocate amounts and check your math. All allocations should add up to the total
    award amount.
    o In this example, the three allocations add up to $100,000:
     $20,000 to the equipment account
     $69,565 to the remaining expenditure accounts (direct cost)
     $10,435 to the indirect cost account

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