An agency is developing a lee for services to cover all direct operating expenditures. Which of the following should be included in the fee…

When an agency is developing a fee to recover costs for providing a service, it must calculate the full

cost of the service. According to cost accounting standards for federal government operations, “full

cost” includes:

Direct costs: staffing, supplies, materials directly used in service provision

Indirect costs: facility costs (e.g., location rent), equipment depreciation, administrative support, etc.

OMB Circular A-25, “User Charges,” requires that user fees for government services be based on the

full cost of providing that service unless otherwise mandated by law. Therefore, staffing (a direct

cost), location rent (indirect cost), and equipment depreciation (a capital asset cost) are all

appropriate to include.

Relevant Standards and Reference:

OMB Circular A-25, “User Charges,” Section 6(d): “Full cost includes all direct and indirect costs to

any part of the Federal Government of providing a good, resource, or service.”

FASAB SFFAS No. 4, Managerial Cost Accounting Concepts and Standards: Defines full cost

components, including depreciation.

GAO “Principles of Federal Appropriations Law,” Red Book, Vol. I: Cost recovery practices in federal

user fee settings.

Therefore, Option B is correct.