Knowledge Base

Please explain how Direct Cost is used.

This is the definition in OMB Circular A-21

D.  Direct costs
1.  General
Direct Costs are those costs that can be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy.  Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or F&A costs.  Where an institution treats a particular type of cost as a direct cost of sponsored agreements, all costs incurred for the same purpose in like circumstances shall be treated as direct costs of all activities of the institution.  Examples of direct costs:  salaries and wages, fringes, professional services, scholarships, lab supplies, etc.
E.  F&A Costs
1.  General
F&A Costs (Indirect) are those that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity or any institutional activity.
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