It is important to have a clear grasp of costs when determining service rates. Misallocated costs can drastically impact the calculated rate and fund balances.
Here are some key points to consider:
- Know Your Purpose
Understanding your service activity can help you identify costs. If you run a lab, you may expect to see lab supplies or equipment, whereas a conference would expect to see catering or program supplies.
- Know Your CFOP
Transactions can be misclassified and posted to another of your self-supporting funds or even another unit’s fund. Regularly reviewing your transactions ensures that all costs are posted to the correct fund.
- Know Your Staffing Requirements
Salary is one of the largest expenditures that may be posted to another fund. Continuous staff time tracking and calculating the appropriate allocation of salary will help ensure that salary posts to the correct fund and is correctly included in service rates.
- Know Your Equipment’s History
Do you have capitalized equipment that you use for your service activity? How was it purchased? Is it associated with a grant? Depreciation is something you may or may not include in your rate, depending on these answers. Note that equipment depreciation costs can be included in service rates, even when not purchased on the 3E service fund. Sponsored equipment depreciation may not be included in the internal rate calculation during the sponsored project period. Federally sponsored assets may never be included in the internal rate calculation.
Contact
For questions, please search for System Government Costing on the “Who to Ask” page.
