Government contractors have to understand the fundamentals of strategic costing and strategic pricing in order to make correct decisions that determine their overall profitability on a job.
Government regulation requires costs to be classified as either a direct cost or an indirect cost. As we know, indirect costs, in the aggregate, represent the largest class of expense incurred on government contracts. Direct costs, by definition, are identifiable with a specific “final cost objective” while indirect costs are associated with common or joint cost objectives.
Learn about service centers and cost allocation methods, specifically direct allocation and step allocation, that can help you understand the "true" cost of your products and services so you can price them for a profitable return.
The recent cancellation of the General Services Administration (GSA) $15Billion Alliant 2 Small Business (A2SB) contract highlights the need for small government contractors to have a properly evaluated cost accounting system.
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