9228     ALLOCATION OF OPERATING EXPENSE AND EQUIPMENT COSTS TO PROGRAMS
(New 10/74)

 

This section is governed by the general guidelines established in SAM Section 9220.

1. Direct Costs
   Costs that can be identified directly to a program will be charged to that program.
2. Indirect Costs
   Indirect costs are all operating expenses or equipment costs which cannot practically be charged directly to a program.  Agencies may utilize worksheets to accumulate expenditures for distribution to programs.  The number of groupings on the worksheet and the number of worksheets will depend upon the number of allocation bases which will be utilized.

In allocating indirect costs, agencies will consider the following:

 

1. Organizational Unit
    
   The allocation basis may involve cost data incurred by various types of organizational units, e.g., division, bureaus, sections, etc.  However, since the final program costs may vary depending on which organizational unit level is selected as an allocation basis, agencies will select an organizational unit at a level which will provide the most accurate distribution of indirect costs to programs.  Organizational units may be combined at this level only when their pattern of expenditures are comparable.
    
2. Allocation Basis
    
   Special care and judgment should be exercised in selecting an equitable basis for distributing indirect costs.  Different bases are used, where appropriate, to allocate different types of expenditures.  For example, telephone expenditures might be allocated based on salaries and wages costs or hours, but utilities and rent might be allocated based upon square feet of space.
    
3. Allocation Data
   Actual expenditure data for the month, quarter or other appropriate period should be used in determining the allocation percentage except where agency management believes that budgeted cost estimates for the fiscal year provide a better basis for allocation than actual data for a comparable or shorter period.

 

In allocating costs to the programs, care must be exercised not to charge cost to a program which that program did not incur.