Understanding Actual Rate Calculation

Through the process of burdening, you can mark up the direct costs of doing business so that you can charge your customer for the indirect costs. Direct costs include costs that you can charge to a specific job, such as actual hours that an employee worked on a job. Indirect costs include costs that you cannot charge to a specific job, such as employee sick time, payroll taxes, or employee benefits. Actual rate calculation enables you to determine whether the burden rates by which you are marking up your direct costs are accurate. If you want to change rates, you can then change your burdening setup, process reburdening, and then generate invoices that reflect these changes.

You use the Actual Rate Calculations program (R52G600) to calculate actual rates. The basis of calculation for this report is to divide amounts for expense transactions (indirect costs) by amounts for base transactions (direct costs). To accomplish this, the system uses the base (raw cost) records in the Burdening Summarized Ledger table (F52G02) and uses the segment definitions, computation methods, and burden base rules to create placeholder records in the Burden Rate calculation Workfile table (F52G60). These records contain the information that the system needs to sort and sequence the data for actual rate calculation by burden category and pool ID. After the system creates these records, the system accumulates the base and expense records by burden category and pool ID to calculate the actual rates. The system then adds records to the F52G60 table for the actual rates.

The system assigns a reference ID number to the records in the F52G60 table. You use the reference ID to review the records that the system creates when you run the R52G600 program. You can also review details for the records and delete reference IDs.

See Reviewing Actual Rate Calculation Reference IDs.

Using the Process Actual Rate Calculations program (P52G60), you can set up the Actual Rate Calculations program to calculate actual rates for all burdening categories, or you can exclude burden categories. This setup enables you to tier the results of the calculation, for example, use the computed fringe rate in the calculation of general and administrative (G & A) rather than the applied fringe rate, or to use the specified fringe rate, such as the target rate in the calculation.

When you run the R52G60 program, the system prints a summary of the rate calculation for the ledger type that you select in the P52G60 program. The report displays the actual rates by burden category, pool, expense, and base amounts. If you have a contract with the U.S. federal government, you can use this report to submit your actual burden rates to the U.S. federal government on an annual basis.