| Assignment.
The process of distributing costs within a Recharge
Center’s operating account to the various products
or services provided by that account in reasonable and
realistic proportion to the benefit provided or other
equitable relationship. All assignment methodologies must
be thoroughly documented.
Allocation.
The process of charging a cost, or a group of costs, to
one or more accounts, in reasonable and realistic proportion
to the benefit provided or other equitable relationship.
All allocation methodologies must be thoroughly documented.
Allowable Cost. The
costs incurred to produce the products or services the
Recharge Center distributes, although not including capital
equipment costs or depreciation. Costs defined as unallowable
by OMB A-21, cannot be included.
Applicable Credits.
Transactions that offset or reduce costs, such as purchase
discounts, rebates, allowances, refunds, etc. For purposes
of charging service center costs to federally-sponsored
programs, applicable credits also include any direct federal
financing of service center assets or operations (e.g.,
the direct funding of service center equipment by a federal
program).
Auxiliary Enterprise.
An activity that provides goods or services primarily
to students, faculty, staff and others for their own personal
use, rather than as a service to internal University operations.
Examples of auxiliary enterprises include residence halls,
dining halls, and bookstores. Auxiliary enterprises are
not subject to the Recharge Policy.
Billing Rate:
The amount charged to a user for a unit of service. Billing
rates are usually computed by dividing the total annual
costs of a service by the total number of billing units
expected to be provided to users of the service for the
year.
Billing Unit:
The unit of service provided by a service center. Examples
of billing units include hours of service, animal care
days, tests performed, machine time used, etc.
Break-Even Analysis.
Determination of the billing rate to charge based upon
projected use/activity, in order to recover costs equal
to the amount of operating expenses.
Cost Studies.
The process through which User Rates are determined by
estimating both the quantity of products or level of services
distributed or provided and the cost of producing and
providing the products or services. Cost studies may involve
the process of allocation and assignment.
Deficit.
The amount that the costs of providing a service exceed
the revenue generated by the service during a fiscal year.
Direct Operating Costs.
All costs that can be specifically identified
with a service provided by a service center. All direct
costs must be budgeted and charged directly to service
center. These costs include the salaries, wages and fringe
benefits of University faculty and staff directly involved
in providing the service, materials and supplies, purchased
services, travel expenses, equipment rental or depreciation.
etc.
Equipment.
An item of tangible property having a useful life exceeding
one year and an acquisition cost of $5,000 or more. Purchases
under this amount are considered consumable supplies.
Equipment Replacement Reserve
Fund. A separate account established for
accumulating (i.e., depositing) use allowance/depreciation
expense cost recovery. The purpose of the cost center
is to accumulate funds, recovered through the application
of approved use allowance/depreciation methods, for replacing
equipment used in service center and specialized service
center operations.
Facilities and Administrative
(F&A) Costs. These costs consist of
general administration and general expenses. Examples
of facilities costs include utilities, building maintenance,
custodial services, depreciation, and external interest
associated with the financing of building construction.
Examples of administrative costs include general administration
and general expenses, such as executive management, payroll,
accounting and personnel administration; maintenance and
operating expenses, such as office supplies, paper, copier
rental expenses; administrative and supporting services
provided by academic departments; libraries; and special
administrative services provided to sponsored agreements.
Fixed-Price Jobs. Costs
that are quoted and billed based upon a flat amount rather
than the approved billing rate. Any fixed price must be
fully supported by a cost study.
Internal Service Center
Overhead. Costs that can be specifically
identified to a service center, but not with a particular
service provided by the center, such as the salary and
fringe benefits of the service center director.
Non-Discriminatory Rates.
Rates that are the same for all internal university
users for the same level of services or products.
Operating Fund.
The primary budget cost center in which all recovered costs
must be recorded and all direct, non-subsidized expenses
should be recorded.
Product. A
collective term that includes goods and/or services a
Recharge Center may produce.
Productive time.
Total time available less non-billable time such as time
for vacation, sick leave, holidays, breaks, equipment
downtown, machine repairs, education/certification and
meetings.
Renovation Costs.
Renovation costs are unallowable, but the depreciation
of renovations done specifically to provide the service
of a center can be included in the center’s rate
calculation. Renovation Costs are defined as significant
alterations or structural changes to plant assets which
increase the usefulness, enhance the efficiency, or prolong
the life of the property and are, therefore, capitalized.
Service Center.
A recharge is the assessment and collection of a charge
by one University department/unit/activity/project for
goods or services, furnished to another University department/unit/activity/project.
A recharge transaction is appropriate when the furnishing
department has incurred expense to make available a product
or service which is sold to customer departments for an
established price, or at a price based on an established
standard pricing method.
Standard Cost Accounting
Methods. Defined by the Cost Accounting
Standards and applied according to the Federal Register
Office of Federal Procurement Policy, Cost Accounting
Standards Board of the Office of Management and Budget.
Start-up Costs. The
costs incurred to establish a new service center. Federal
regulations do not permit these costs to be recovered.
Subsidy. Additional
funding provided by sources other than the recovery of
costs from users. Subsidies may be in the form of actual
fund transfers into the service center operating cost
center or the paying of service center expenses from non-service
center cost centers. The most common forms of subsidy
will usually include the payment of service center employees’
salaries, the payment of maintenance and operating expenses,
or the purchase of capital equipment from other funding
sources. While specialized service center operations may
be subsidized by authorized university allocations, to
the extent that specialized service center expenses are
paid for from non-service center sources, they cannot
be included in the university’s facilities and administrative
cost recovery pool.
Surplus. The
amount that the revenue generated by a service exceeds the
costs of providing the service during a fiscal year.
Unallowable Costs.
Costs that can not be charged directly or indirectly to
sponsored programs. These costs are specified in OMB A-21
issued by the Federal Office of Management and Budget.
Common examples of unallowable costs include advertising,
alcoholic beverages, bad debts, charitable contributions,
entertainment, fines and penalties, goods and services
for personal use, interest (except interest related to
the purchase or construction of buildings and equipment),
selling and marketing expenses.
Useful Life.
The estimated time period over which capital equipment
and buildings will provide useful service.
User Rate.
The price charged a buyer for a unit of the product distributed
from a
Recharge Center.
Working Capital.
Funds accumulated in excess of actual cost in order to
fund future operating or capital expenses.
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