The example in Table 8.2 shows three possible ways of apportioning total direct costs. Using the same example, suppose the direct non-labor (DNL) cost and G&A are broken down as follows:

Assuming all remaining costs shown in Table 8.2 are unchanged, compute the project costs for MARS and PLUTO using the following apportioning rules:
Overhead (OH) is proportionate to direct labor (DL)?
Freight G&A is proportionate to materials.

Other G&A is proportionate to DL, OH, DNL, and freight.

Transcribed Image Text:

Table 8.2 Examples of Indirect Cost Apportionment SETI COMPANY COMPANY-WIDE (INDIRECT COSTSs) 120 Overhead (rent, utilities, clerical, machinery) General (upper management, staff, benefits, etc.) G&A OH 40 Indirect Total 160 Project costs MARS Project PLUTO Project Total Direct labor (DL) Direct non-labor (DNL) 50 100 150 40 10 50 90 110 200 Direct Total 200 Direct and Indirect Total 360 Some methods for apportioning indirect costs I. Total indirect proportionate to total direct costs MARS Project PLUTO Project Total DL and DNL OH and G&A 200 160 90 110 88 72 162 198 360 Table 8.2 Examples of Indirect Cost Apportionment SETI COMPANY COMPANY-WIDE (INDIRECT COSTSs) 120 Overhead (rent, utilities, clerical, machinery) General (upper management, staff, benefits, etc.) G&A OH 40 Indirect Total 160 Project costs MARS Project PLUTO Project Total Direct labor (DL) Direct non-labor (DNL) 50 100 150 40 10 50 90 110 200 Direct Total 200 Direct and Indirect Total 360 Some methods for apportioning indirect costs I. Total indirect proportionate to total direct costs MARS Project PLUTO Project Total DL and DNL OH and G&A 200 160 90 110 88 72 162 198 360

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