University of Illinois System
Accounting & Budgeting
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Goods or Services Sold (Base)

Service center managers must track actual usage in order to determine compliant service rates. All users or usage base (internal and external) must be included in the base whether charged or not. This is in accordance with University of Illinois System policy and federal guidance, which states that costs of services must be charged based on actual usage of the services and does not discriminate between activities (e.g. sponsored project or other users).

Service center managers must ensure there is no cross-subsidization between user groups. Combining the results of various services is not acceptable when the mix of users of each service is different. The center must use the measurement which considers the cost/benefit of the product or service being provided, in other words, use the measurement which allocates costs equitably among all customers or usage base. This is in accordance with University of Illinois System policy and federal guidance which states when charging costs to a cost objective (e.g. sponsored project or departmental funds) costs must be charged based on the “relative benefits received”. In other words, service rates must be charged based on actual usage.

Detailed supporting base documentation must be maintained on-file by the department and made available for review upon request by system administrators, as well as U of I System, state, and federal auditors.

A service center may have different measurable units/bases for the different types and classes of products or services it offers. For example, a center that performs tests on samples has a couple of possible units of measure; it could charge per test or per hour. If certain tests take twice as long as others, and labor is a large portion of the cost of performing a test, it is not equitable to charge each user on a per test basis. In such circumstances, the user rate should be charged on a per hour basis.

In addition, the service center needs to consider the types of rates they need to implement when determining proper base for rate calculations (e.g. training rate, staff assist hourly rate, sample rate, etc.).

When determining usage base, the service activity must identify usage not billable to customers and confirm that these units are not included in the base total. For example, if the service provides equipment testing per sample, then samples consumed in quality control testing would not be billable to a specific customer and therefore should not be included in the base total. Below are examples of non-billable units for different types of base units and an example of a base calculation:

Examples of Non-Billable Units

Hourly Equipment Sample Testing Square Footage
Vacation, sick, and holiday hours Testing hours, such as quality control Quality control Common area space
Indirect hours Maintenance / Repair / Downtime hours Failed samples Unoccupied Space

Note: Excluding non-billable units (such as vacation time, or quality control samples) does not necessarily mean the associated costs are unallowable on the fund (allowable costs still flow into the numerator of the rate). This step simply excludes those units from the denominator of the rate calculation.

Machine Hours Example

Total Machine Hours per year 6,240
Less: Testing Hours (126)
Less: Repair Hours (84)
Less: Downtime Hours (1,320)
Total Billable Machine Hours 4,710