REMINDER: Allocation of Direct and Indirect Costs

Published January 25, 2023

Cost Accounting Standard 418 provides the criteria for the accumulation of indirect costs, including service center and overhead costs, in indirect cost pools. It also includes guidance relating to the selection of allocation measures based on the beneficial or causal relationship between an indirect cost pool and cost objectives.

Newport News Shipbuilding generally uses department designation to assign indirect costs to the appropriate cost pools. For this reason, it is important to understand when it is appropriate to charge time on loan to another department.

Time should only be charged as “loan to” a department when associated with activities or functions that are typically performed by that department. The availability or lack of budget does not determine the appropriate “loan to” department for any charge. For assistance in determining the correct way to charge, contact the Government Financial Relations Department (O74).