Which costs are included in a contractor's fully burdened rate but are not direct costs?

Which costs are included in a contractor's fully burdened rate but are not direct costs?

• A. G&A and fringe benefits
• B. Direct materials
• C. Subcontract costs
• D. Travel reimbursements

Answer: (B)

Fully burdened rate combines direct costs with indirect costs. Direct costs are costs that can be traced to a specific contract, such as direct materials and direct labor. Indirect costs are those that support multiple contracts and aren’t tied to one job; these are allocated into the burdened rate as overhead, including General & Administrative expenses and fringe benefits. So, the costs included in the fully burdened rate that are not direct costs are the indirect ones like G&A and fringe benefits. Direct materials, subcontract costs, and typical travel reimbursements are treated as direct costs or reimbursable expenses rather than part of the indirect portion.

Fully burdened rate combines direct costs with indirect costs. Direct costs are costs that can be traced to a specific contract, such as direct materials and direct labor. Indirect costs are those that support multiple contracts and aren’t tied to one job; these are allocated into the burdened rate as overhead, including General & Administrative expenses and fringe benefits. So, the costs included in the fully burdened rate that are not direct costs are the indirect ones like G&A and fringe benefits. Direct materials, subcontract costs, and typical travel reimbursements are treated as direct costs or reimbursable expenses rather than part of the indirect portion.