Most award budgets specify the approved dollar amounts for direct and indirect costs, but some give only percentages.

To calculate costs when an award specifies indirect costs as a percentage of total direct costs, use the following example.

Example: Consider a sponsored project award with these instructions:

• The total award is $100,000.
• Equipment is budgeted at $20,000.
• The indirect cost rate is 15%, excluding equipment.

1. Calculate the amount subject to indirect costs (IDC):

   Total award	$100,000
   Minus exclusions (equipment)	-$20,000
   Modified total costs	$80,000

2. Divide the modified total costs by 1.X% (where X=IDC percentage). The result is the dollar amount of direct costs.

   • In this example, $80,000 divided by 1.15 equals $69,565 in direct costs.

3. Subtract direct costs from the modified total costs amount. The result is the dollar amount of indirect costs.

• In this example, $80,000 minus $69,565 equals $10,435 in indirect costs.

4. Allocate amounts and check your math. All allocations should add up to the toal award amount.
   • In this example, the three allocations add up to $100,000:
     • $20,000 to the equipment account
     • $69,565 to the remaining expenditure accounts (direct cost)
     • $10,435 to the indirect cost account

Questions? Please see OPAFS Contacts.