Title 48 – FEDERAL ACQUISITION REGULATIONS SYSTEM Chapter 99 – COST ACCOUNTING STANDARDS BOARD, OFFICE OF FEDERAL Subchapter B. 48 CFR, Pt TITLE FEDERAL ACQUISITION REGULATIONS SYSTEM AND COST ACCOUNTING STANDARDS PART COST ACCOUNTING. interpretations indicated thereto contained in 48 CFR , in effect on the date of award of this subcontract or, if the Seller has submitted cost or pricing data.

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Conversely, if the opposite conditions prevail at any segment, a greater allocation than would result from the application of Adherence to these cost accounting concepts is necessary to guard against the overcharging of some cost objectives and to prevent double counting.


Such expenses shall be allocated directly to segments to the maximum extent practical. He 994, within 30 days of having done so, submit a report to the Cost Accounting Standards Board setting forth all material facts.

Contractor F’s practice complies with provisions of A production run of these items was started, finished, and placed into inventory in a single cost accounting period.

The period may be expressed in units of time or output. Central cfrr or accruals which are made by a home office on behalf of its segments shall be allocated directly to segments to the extent that all such payments or accruals of a given type or class can be identified specifically with individual segments.

Such allocations shall minimize to the extent practical the amount of expenses which may be categorized as residual those of managing the organization as a whole. Preambles to the Cost Accounting Standards published by the original Cost Accounting Standards Board, as well as those preambles published by the signatories to the Federal Acquisition Regulation respecting changes made under their regulatory authorities, are available by writing to the: Following receipt of the contracting officer’s decision, the contractor must identify the disallowed costs and specific other costs incurred for the same purpose in like circumstances in any subsequent estimating, cost accumulation or reporting for Government contracts, in which such costs are included.

The policy may provide for any reasonable starting and ending dates in dfr the first and last year depreciable cost. The cost accounting practices used by the contractor, however, must be followed consistently and the method used to reallocate such costs, of course, must provide an equitable distribution to all final cost objectives. Accordingly, costs of these functions shall be allocated cft use of a rate, such as a rate per labor hour, rate per machine hour or cost per square foot, unless such measures are unavailable or impractical to ascertain.


In determining whether amounts of cost are material or immaterial, the following criteria shall be considered where appropriate; no one criterion is necessarily determinative:. The offeror shall indicate below whether award of the contemplated contract would, in accordance with subparagraph a 3 of the Cost Accounting Standards clause, require a change in established cost accounting practices affecting existing contracts and subcontracts. For contractors with no previous contracts subject to this Standard, this Standard shall be applied beginning with the contractor’s next full fiscal year beginning after the receipt of a contract to which this Standard ccr applicable.

As the employee performs services, the related cost objectives are charged for the services at the charging rate, the employee is paid at his base rate, and the excess is credited to the accrued liability for each benefit. Contractor’s Disclosure Statement must be amended for the proposed changes in accounting practices. These items are issued during the next cost accounting period. As a result of the merger of operations, the combined segment decides to allocate the cost of the manufacturing overhead pool to all final cost objectives, using a direct labor dollars base.

Of course, the inventory must be available for each 99044 in the sampling time ccr. Other terms defined elsewhere in this part 99 shall have the meanings ascribed to them in those definitions unless paragraph b of this subsection, requires otherwise. Accordingly, all machine tools are accounted for as a single group. Contractor estimates a single dollar amount for machining cost to cover 994, material and overhead. During a cost accounting period, Unit D acquires and uses a small building, constructs a small production facility using its own resources, and keeps for its own use one unit of a testing device 99044 it manufactures and sells to its customers.

Such compliance shall be required fcr from the date of applicability to such contract or subcontract. In essence, the Disclosure Statement submitted by the contractor, by distinguishing between direct and indirect costs, and by describing the criteria and circumstances for allocating those items which are sometimes direct and sometimes indirect, will be determinative as to whether or not costs are incurred for the same purpose.

48 CFR Part – COST ACCOUNTING STANDARDS | US Law | LII / Legal Information Institute

Capitalization shall be based upon a written policy that is reasonable and consistently applied. This chapter does not apply to sealed bid contracts or to any contract with a small business concern see They shall be allocated to the segment for which the expenses were incurred on the basis of the beneficial or causal relationship between the expenses incurred and all benefiting or causing segments. Accordingly, all 99904 and equipment is accounted for as a single group. In accordance with Line management is considered to consist of management or supervision of a segment or group of segments as a whole.


FAR – Appendix Cost Accounting Preambles and Regulations*

This may be the case, for example, if a segment relies heavily on the home office for certain residual functions normally performed by other segments on their own. Contractor B’s department is not a production unit as defined in Rules, regulations, cost accounting standards, and modifications thereof promulgated or amended by the Board shall be accompanied by prefatory comments and by illustrations, if necessary.

It will also enhance objectivity, consistency, xfr verifiability, and promote uniformity and comparability in contract cost measurements. Normally, cost measurements are based on the concept of enterprise continuity; this concept implies that major asset acquisitions will be capitalized, so that the cost applicable to current and future accounting periods can be allocated to cost objectives of those periods.

For CAS-covered contracts placed on or after January 1,completed Disclosure Statements are required as follows:. Any member appointed to fill an interim vacancy on the Board shall serve for the remainder of the term for which his or her predecessor was appointed. After 4 years of service, during which time this Standard has become applicable, a change in the production situation results in a well-supported determination to shorten the estimated service life to a total of 7 years.

A separate labor-cost variance shall be accumulated for each production unit. However, details of the actions so taken shall be provided to cf of the members at the next Board meeting following such actions. The number of groupings will depend primarily on the variety and significance of service and management cdr performed by a particular home office.

This procedure is in compliance with the requirements of this 990. In accordance with the provisions of the Standard, Company Z shall use an estimated service life of ten years for the acquisition unless it can support a different estimate for the entire group. The purpose of this Cost Accounting Standard is to ensure that each contractor’s practices used in estimating costs for a proposal are consistent with cost accounting practices used by him in accumulating and reporting costs.