Two types of costs are associated with sponsored projects: direct costs and indirect costs.
Direct and indirect costs are distinguished by whether the cost can be identified with a particular sponsored project, not the nature of the cost.
Direct Costs
Direct costs can be identified with a particular sponsored project or can be assigned directly to such activities relatively easily with a high degree of accuracy.
Examples:
- Salary of a researcher (including benefits)
- Salary of a technical staff member (including benefits)
- Laboratory supplies, chemicals, and glassware purchased for a project
- Travel to a conference to present results of the project
Indirect Costs
Indirect costs (also called Facilities and Administrative (F&A) costs or overhead costs) are incurred for common or joint objectives. Therefore, they cannot be identified readily with a particular sponsored project.
Examples include:
- Building utility or maintenance costs
- Salary of a departmental administrator
- Library costs
Applying Costs to Sponsored Projects
Generally, the total cost of a sponsored project is the sum of the allowable direct costs plus the allocable portion of the allowable indirect costs.