CAS 410-40(b)(1) and CAS 410-50(d) require that the allocation base for G&A expenses include all significant elements of cost input that represent the total activity of the business unit.These allocation practices are in accordance with CAS 410, since the costs are allocated to final cost objectives on the basis of a beneficial or causal relationship. The contractor allocates the $400,000 to final cost objectives on the basis of square footage. The contractor allocates the $200,000 to final cost objectives on the basis of direct labor dollars. Of this, $200,000 is for payroll processing and $400,000 for building management of the building where Business Unit Q performs all its work. In accordance with CAS 410-50(g)(2), separate allocations that are significant in amount and are received by the home office for centralized service functions, staff management of specific activities of segments, and central payments or accruals must be allocated to business unit final cost objectives on the basis of a beneficial or causal relationship between the cost objectives and the expense.ĮXAMPLE: Business Unit Q receives a home office cost allocation of $600,000.In accordance with CAS 410, Business Unit X allocates the $100,000 to Business Units Y and Z on the basis of number of personnel, and Business Unit X removes the $100,000 from its G&A expense pool. The cost of the payroll function total $100,000. These G&A costs must also be removed from the segment that is performing the G&A activities.ĮXAMPLE: Business Unit X performs the payroll function for Business Units Y and Z. In such cases, CAS 410-50(a) requires that the G&A expenses be allocated to the other segments on a beneficial or causal relationship. A business unit may perform G&A activities for one or more other segments of a company.The standard also provides criteria for allocating home office expenses received by the business unit segment to business unit final cost objectives (CAS 410-20). Part 3 will address special allocations of G&A expenses.īackground: To provide criteria for the allocation of business unit general and administrative (G&A) expenses to business unit final cost objectives.This Part 2 addresses the requirements/techniques for application related to the G&A allocation base.
Part 1 addressed the overall purpose of the standard, as well as the requirements/techniques related to the G&A expense pool.Each part addresses the fundamental requirements and techniques for application related to the standard, and provides specific examples.
0 kommentar(er)
