A year-end audit conducted for an engineering firm provided the following information. What is the firm's approximate facility capital cost of money (FCCM) on a direct labor basis?
Item Cost ($)
Direct Labor 6,234,668
Allowable fringe benefits 3,233,889
Allowable general overhead 8,444,444
Facility cost of capital (FCCM) 190,000

Question

Quizplus · Accepted Answer

The firm's approximate facility capital cost of money (FCCM) on a direct labor basis is 3.0%.
Solution
Determine the ratio of the facilities capital cost to the cost of direct labor.
FCCM rate = FCCM/direct labor cost
= ($190,000)/($6,234,668)
= 0.03 (3.0%)

A Year-End Audit Conducted for an Engineering Firm Provided the Following