General Contractor Indirect Cost Allocation Base Options
Situation: A General Contractor doesn't have a lot of labor associated with their contracts and, in fact on some projects, may not have much at all compared to other projects. DCAA material suggested to use "direct labor" as an allocation base. My question Mr. Gunn is: can another method be used such as sales or total direct cost instead of direct labor? (Provided that we use a consistent method that has stable results?), and
If such an alternative method is acceptable, would we (can we) then put all direct payroll taxes and direct workers comp. associated with a project in "direct costs" (and directly job cost it) instead of an "indirect pool" allocating these costs? Any guidance that you can extend would be greatly appreciated.
The answer to your first question is Yes with some cautionary notes.....
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