DCAM Section 8

8-410.2 Illustrations

The following illustrations supplment those in paragraph 410.60 of the standard. They are to be used as a guide in determining whether a contractor's practices comply with the standard.

a. Problem. Division X excludes from its total cost input base, the cost of intercompany transfers from Division Y.

Solution. The intent of the standard is that all actions, which represent the total productive activity of the segment, should be included in total cost input. The costs of the intercompany transfers should therefore be included in the total cost input base used to allocate G&A expenses. Division X's exclusion of the intracompany transfers from the base does not comply with the standard.