- How can an internal charge be documented for services from a Service Center?
- How do I bill service center charges to an overhead-bearing NJIT grant or contract?
A service or recharge center should have a standard charge for each type of service provided. The charges should represent the full cost of the service, including indirect costs such as facilities, equipment and administration. The standard charges should be tabulated and published. The standard charges should have an underlying rationale based in verifiable actual costs. The rates usually will be expressed as cost per hour, but may be expressed as cost per unit of service where unit costs are more meaningful.
For example, the NJIT indirect cost rate can be used to estimate the total cost of a service. Capital equipment (costing more than $2500), administrative supplies, and tuition for student employees should be excluded from the charges when this method is employed. If the service provided is labor intensive then personnel costs might be a substantial part of center charges. Labor costs would be the aggregate of wages and fringe benefits for the service being priced. Other components of the price might include equipment maintenance, consumables, supplies, non-capital equipment, and operating expenses. The sum of these direct costs should be multiplied by the NJIT indirect cost rate to represent the total cost of the center service being charged. Total costs of the center calculated in this way would be divided among the hours of service or units of service to be priced to obtain a price per hour or unit of service.
Other methods might be used where the NJIT indirect cost rate is not representative of the indirect costs of a particular center. For example, if a center is more equipment-intensive than other NJIT research activities in general, then a cost for services can be build up from a zero base. The indirect cost of center space can be estimated based upon NJIT's average cost per square foot times the area of the center. The indirect cost of center equipment can be estimated on an item by item basis with cost and depreciation data obtainable from General Accounting Department. Direct costs could be added to these indirect costs, as discussed in the paragraph above. Administrative costs could be estimated as 26% of direct costs minus exclusions, as provided in federal OMB Circular A-21. Total costs of the center calculated in this way would be divided among the hours of service or units of service to be provided to obtain a price per hour or unit of service.
Government sponsors will not allow charges that are more than those paid by the most preferred customers. Therefore, do no offer discounts to any customer that will not be extended also to federal and state government sponsors. You may, however, charge more to other customers than you charge to government sponsors. Service and recharge centers may not compete with commercial enterprises, because of government subsidies to NJIT.
Service centers are required by federal regulation to operate in a non-profit fashion. Profit and loss must be within 5% of ideal non-profit operation within each NJIT fiscal year. Prices are to be adjusted upward after a loss year, and downward after a profit year, by an amount forecast to produce no profit or loss in the following year.
The internal charge is recorded on an accounting Journal Voucher. The Journal Voucher form is available at www.njit.edu\finance.The first line of the voucher debits the account representing the cost center that received the services. The object code to debit is 6239 (Research Center Services), unless another object code exists specifically for your Center. The second line of the voucher credits the Center account, and uses object code 9049. The Journal Voucher is signed by the responsible person for the account being charged (debited), and by the person who prepared the voucher. It is routed to General Accounting Department via Grant and Contract Services for grant and contract accounts. The Journal Voucher should be accompanied by an invoice or price list indicating the services rendered.
Service center charges to an overhead-bearing grant or contract at NJIT should be billed at a discount equal to the overhead rate in the grant or contract. For example, if a grant had a 47% overhead rate, and the standard service center charge for the service is $100, then the grant should be billed $100/1.47=$68.03. In the same circumstance, a non-overhead-bearing NJIT account or an entity outside NJIT would be charged $100.
The reason for this is that we should avoid charging twice for the cost of service center facilities, equipment and administration. The service center charges include overhead costs like maintenance, equipment, facilities and administration. Overhead in the grant, also known as the Facilities and Administration (F&A) rate, represents these costs, too. The grant or contract overhead rate is shown on the FRS AP6 screen of the grant or contract account. The F&A costs will be recovered during automated processing of the service center expense in the grant account rather than at the point of sale by the service center.