48 CFR 9904.401-60 - 9904.401-60 Illustrations.

(a) The following examples are illustrative of applications of cost accounting practices which are deemed to be consistent.

Practices used in estimating costs for proposals	Practices used in accumulating and reporting costs of contract performance	1. Contractor estimates an average direct labor rate for manufacturing direct labor by labor category or function	1. Contractor records manufacturing direct labor based on actual cost for each individual and collects such costs by labor category or function.	2. Contract estimates an average cost for minor standard hardware items, including nuts, bolts, washers, etc	2. Contractor records actual cost for minor standard hardware items based upon invoices or material transfer slips.	3. Contractor uses an estimated rate for manufacturing overhead to be applied to an estimated direct labor base. He identifies the items included in his estimate of manufacturing overhead and provides supporting data for the estimated direct labor base	3. Contractor accounts for manufacturing overhead by individual items of cost which are accumulated in a cost pool allocated to final cost objectives on a direct labor base.

(b) The following examples are illustrative of application of cost accounting practices which are deemed not to be consistent.

Practices used for estimating costs for proposals	Practices used in accumulating and reporting costs of contract performance	4. Contractor estimates a total dollar amount for engineering labor which includes disparate and significant elements or functions of engineering labor. Contractor does not provide supporting data reconciling this amount to the estimates for the same engineering labor cost functions for which he will separately account in contract performance	4. Contractor accounts for engineering labor by cost function, i.e. drafting, designing, production, engineering, etc.	5. Contractor estimates engineering labor by cost function, i.e. drafting, production engineering, etc	5. Contractor accumulates total engineering labor in one undifferentiated account.	6. Contractor estimates a single dollar amount for machining cost to cover labor, material and overhead	6. Contractor records separately the actual costs of machining labor and material as direct costs, and factory overhead as indirect costs.