The indirect cost rate is simply an arithmetic calculation of dividing a pool of expenses (numerator) by an allocation base (denominator) such as direct labor cost or total direct costs plus overhead.
How do you evaluate indirect costs?
Your finance department determines the combined indirect-cost rate by calculating the ratio of all projected overhead costs to all projected direct salaries. You determine an activity’s indirect costs by multiplying its direct salaries by the indirect-cost rate.
What is Federal indirect cost rate?
An indirect cost rate (ICR) is the ratio between the total indirect expenses and a direct cost base. A nonprofit establishes an ICR through negotiations with its cognizant federal agency by submitting an ICR Proposal and other supporting documentation, which is subject to review and/or audit.
How to calculate direct and indirect cost base?
Classify the activities and their costs as direct or indirect. Eliminate from indirect costs capital expenditures and those stipulated as unallowable by OMB Circular or program legislation. Compute the rate by dividing the total remaining indirect costs by the direct cost base selected for distribution of the indirect costs.
Which is an example of an indirect cost rate?
An indirect cost rate represents the ratio between the total indirect costs and benefiting direct costs, after excluding and or reclassifying unallowable costs, and extraordinary or distorting expenditures.
Where can I find indirect cost proposal guidelines?
For nonprofit organizations, click on the link to Indirect Cost Proposal Guidelines on the U.S. Department of Labor’s website. For state and local governments – Commonly asked questions about how to prepare your indirect cost proposal for those subject to OMB Circular A-87.
How is an indirect question different from a direct question?
Notice that the indirect question has the word order “the time is” (i.e., subject + verb) not “is the time” (i.e., verb + subject). In other words, an indirect question has the same word order as a statement, not a question.) I’m asking where you are going. (The embedded direct question is “Where are you going?”.
