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EQUIPMENT FABRICATION
University policy exempts from indirect cost charges those material costs associated with the fabrication of individual items that, when completed, will have a capitalized value of $5,000 or more and will be recorded in the University's equipment inventory system. A subaccount will be established to receive material charges for such fabricated items. The items to be fabricated must be identified in the proposal to the sponsor as well as on a Project Budget (7471) Form when the subaccount is established. Purchases will be made against the fabrication subaccount until the assembly is completed or the funds have been exhausted. No additional charges will be accepted against the subaccount without the approval of the Financial Operations Coordinator and the DRDA Project Representative. The completed assembly must then be identified and booked as equipment by Property Control.
This exemption from indirect cost charges does not apply to items fabricated as part of an end product, the ownership of which will be transferred to the sponsor. In such cases, the cost of labor, materials and supplies, and other costs involved in the fabrication should be classified under the appropriate account codes, and an indirect cost rate must be applied to all such costs associated with the fabricated items. Items purchased as part of the fabrication which otherwise would qualify as equipment, however, will not be subject to indirect cost charges. Purchase requisitions for such equipment components should show the expense code as 3710.
If you have any questions or require additional information, please contact: Robert Barbret in Financial Operations (764-9593) or Jim Randolph in the Division of Research Development and Administration (764-7242).
(Updated 6/08/99)