(a) The method or technique used for measuring costs has been changed. ------------------------------------------------------------------------
(1) Contractor changes its actuarial (1)(i) Before change: The
cost method for computing pension contractor computed pension
costs.. costs using the aggregate cost
method.
(ii) After change: The
contractor computes pension
cost using the unit credit
method.(2) Contractor uses standard costs to (2)(i) Before change:
account for its direct labor. Labor Contractor's direct labor cost
cost at standard was computed by was measured with only one
multiplying labor-time standard by component set at standard.
actual labor rates. The contractor (ii) After change: Contractor's
changes the computation by multiplying direct labor cost is measured
labor-time standard by labor-rate with both the time and rate
standard. components set at standard.------------------------------------------------------------------------
(b) The method or technique used for assignment of cost to cost accounting periods has been changed. ------------------------------------------------------------------------
(1) Contractor changes his established (1)(i) Before change: Items
criteria for capitalizing certain having acquisition costs of
classes of tangible capital assets between $200 and $400 per unit
whose acquisition costs totaled $1 were capitalized and
million per cost accounting period. depreciated over a number of
cost accounting periods.
(ii) After change: The
contractor charges the value
of assets costing between $200
and $400 per unit to an
indirect expense pool which is
allocated to the cost
objectives of the cost
accounting period in which the
cost was incurred.(2) Contractor changes his methods for (2)(i) Before change: The
computing depreciation for a class of contractor assigned
assets. depreciation costs to cost
accounting periods using an
accelerated method.
(ii) After change: The
contractor assigns
depreciation costs to cost
accounting periods using the
straight line method.
(3) Contractor changes his general (3)(i) Before change: The
method of determining asset lives for contractor identified the cost
classes of assets acquired prior to accounting periods to which
the effective date of CAS 409. the cost of tangible capital
assets would be assigned using
guideline class lives provided
in IRS Rev. Pro. 72-10.
(ii) After change: The
contractor changes the method
by which he identifies the
cost accounting periods to
which the costs of tangible
capital assets will be
assigned. He now uses the
expected actual lives based on
past usage.------------------------------------------------------------------------
(c) The method or technique used for allocating costs has been changed. ------------------------------------------------------------------------
(1) Contractor changes his method of (1)(i) Before change: The
allocating G&A; expenses under the contractor operating under
requirements of Cost Accounting Cost Accounting Standard 410
Standard 410. has been allocating his
general and administrative
expense pool to final cost
objectives on a total cost
input base in compliance with
the Standard. The contractor's
business changes substantially
such that there are
significant new projects which
have only insignificant
quantities of material.
(ii) After change: After the
addition of the new work, an
evaluation of the changed
circumstances reveals that the
continued use of a total cost
input base would result in a
significant distortion in the
allocation of the G&A; expense
pool in relation to the
benefits received. To remain
in compliance with Standard
410, the contractor alters his
G&A; allocation base from a
total cost input base to a
value added base.(2) The contractor changes the (2)(i) Before change: The
accounting for hardware common to all contractor allocated the cost
projects. of purchased or requisitioned
hardware directly to projects.
(ii) After change: The
contractor charges the cost of
purchased or requisitioned
hardware to an indirect
expense pool which is
allocated to projects using an
appropriate allocation base.(3) The contractor merges operating (3)(i) Before change: In
segment A and B which use different segment, A, the costs of the
cost accounting practices in manufacturing overhead pool
accounting for manufacturing overhead have been allocated to final
costs. cost objectives using a direct
labor hours base; in segment
B, the costs of the
manufacturing overhead pool
have been allocated to final
cost objectives using a direct
labor dollars base.
(ii) After change: As a result
of the merger of operations,
the combined segment decides
to allocate the cost of the
manufacturing overhead pool to
all final cost objectives,
using a direct labor dollars
base. Thus, for those final
cost objectives referred to in
segment A, the cost of the
manufacturing overhead pool
will be allocated to the final
cost objectives of segment A
using a direct labor dollars
base instead of a direct labor
hours base.------------------------------------------------------------------------