Cost Allocation
Cost allocation is a comprehensive distribution of agency-wide administrative costs to all departments that benefit or receive services.
- Costs of central service departments such as General Administration, Human Resources, Payroll and Purchasing are distributed to all departments that benefit from their services by unique, fair and equitable allocation bases.
- Direct operating programs benefit from the general city structure; therefore, the funding for the direct operating program should reimburse the local government for that support.
- MGT provides a wide range of services to assist local government with the preparation of cost allocation plans. MGT's senior costing service consultants have prepared hundreds of A-87 and full cost allocation plans. These plans calculate, using Federal Government developed guidelines, the indirect costs of supporting federally funded (grant) services.
- An A-87 plan also calculates general fund support to non-general fund operations.
- Full cost plans are more inclusive of costs compared to OMB A-87 cost plans and used for internal purposes.
