(Also known as Fee for Service and Sales for Service Agreements)
When creating a Revenue Service Agreement to provide a service(s) to an external agency, it is crucial that the total cost (and associated rate) being charged out includes the appropriate costs to ensure that the University recovers all costs associated with the service being performed. To ensure that all costs are given consideration, the Division of Finance and Administration has developed a worksheet to facilitate deriving the appropriate rate. The proposed rates are reviewed by the Cost Policy Analysts. The remaining related functions (invoicing, expense and tax considerations along with establishments of fund and COA combinations) are handled by the Financial and Accounting Services Team. These are miscellaneous activities and budgets will be temporary, booked to match actuals.
Not only is it important that all Direct Costs be recovered, but Indirect Costs, such as utility expenses or building depreciation, should also be recovered, as prescribed in the University of California Personnel Manual APM, section 020. From a costing perspective, indirect costs should be included in the costs being billed to external agencies, as these indirect costs represent the true costs of performing these activities and should not be covered by other unrelated activities or functions. Of course, other considerations must be made when looking at things such as competition with other commercial sources, but it is important that we document costs as consistently as possible.
General Inquiries please email recharge@ucmerced.edu
