Example 2

In some cases, US government contractors use time and materials billing to calculate billable amounts and use fees to calculate revenue amounts. What is Cost Plus Revenue Recognition?

Fee Calculation

Fee calculations are based on the fee parameters you define for the contract and are calculated when you run Invoice Calculation (BR120) and Revenue Calculation (BR130). The following prerequisite rules apply:

  • The activity in the cost transaction must be flagged as billable on Activity (AC10.1).

  • The account category for the cost transaction containing the fee must be flagged for Billing and Revenue on Account Category Detail (AC08.3) or Override Account Categories (AC06.1).

  • The billing method for the contract activity defined on Activity Billing (BR00.1) must be Cost Plus, Time and Materials, or Unit of Production (transaction based).

  • The revenue method for the contract defined on Contract Parameters (BR10.1) must be Accrual or Cost Plus (transaction based).

Fee Rates

As part of fee setup, you establish rates that will be used for calculating fees. The rate is the percentage that is multiplied by the transaction amount or unit on the source transaction to determine the fee amount. For example, a 10% rate applied to a $500 transaction would result in a $50 fee.