Does your department operate a 3E service center? If so, do you have systems in place to accurately track the amount of goods or services sold to customers annually? This data is called the usage base and is not recorded in the university’s standard financial statements but is crucial to the administration of 3E funds.
The usage base is the largest single factor that determines whether a service center (or storeroom) recovers its costs and breaks even over time. Using inaccurate usage base data leads directly to inaccurate rates, resulting in over or under charging customers.
The usage base tracks the number of goods or services provided annually to all customers. Depending on the type of service, usage may be measured in samples, hours, days, square feet, or any other relevant unit of measure. Individual services on the same 3E fund may have different units of measure. Departments should carefully consider how they measure billable usage, as service centers must bill customers in a way that allocates costs equitably among all customers based on their actual usage.
Special attention must be given to non-billable items that should be excluded from the usage base total. The cost of necessary functions that do not benefit a specific customer may be recovered in rates but should not be included in the base usage. For example, if the service provides testing on a per-sample basis, samples consumed in quality control would not be billable to a specific customer and, therefore, should not be included in the usage base total.
Service activities are required to track and maintain documentation of actual usage to compute compliant service rates. Detailed base documentation includes (at a minimum):
- The date the service was provided
- The number of units provided
- The customer who received the service
- CFOP information
Additional principles for determining an appropriate usage base can be found on the Goods or Services Sold page on the BusFin website.
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