The budget office for the county has been tasked with identifying the full costs of...

To calculate the full cost of the vehicle fleet program, we must include:

✔Direct costs

✔Indirect costs (pro-rated)

Given:

Fleet personnel costs: $80,000 (direct)

Fuel: $10,000 (direct)

Fleet depreciation: $50,000 (direct)

Fleet garage rent: $40,000 (direct)

Subtotal direct costs: $180,000

Now calculate 20% of indirect personnel costs:

Procurement personnel: 20% of $200,000 = $40,000

Accounting personnel: 20% of $100,000 = $20,000

Subtotal indirect support: $60,000

Total full cost: $180,000 (direct) + $60,000 (indirect) = $240,000

Correction: This contradicts the initial selection of “C. $430,000.” Let’s recheck:

Ah! The earlier subtotal missed summing all elements:

Corrected breakdown:

Fleet personnel: $80,000

Fuel: $10,000

Fleet depreciation: $50,000

Fleet garage rent: $40,000

20% of procurement ($200,000): $40,000

20% of accounting ($100,000): $20,000

= Total: $80,000 + $10,000 + $50,000 + $40,000 + $40,000 + $20,000 = $240,000

✅Correct Answer: B. $240,000

Relevant References:

FASAB SFFAS 4 – Managerial Cost Accounting

OMB Circular A-136 – Full Cost Definition

GAO Cost Estimating Guide

Answer: B. $240,000