Overhead pools are generally used to allocate expenses related to two or more contracts. If an expense can be identified to a single contract, it is considered a direct cost and not an overhead expense. If an expense is not related to contract performance and instead is incurred to administer the company, it is considered to be a G&A expense.
GovBooks allows you to set up as many as 10 overhead pools with labor costs serving as the allocation base as selected in the Account Assignment screen. Two-tier and three-tier allocation bases are supported. A two-tier allocation base excludes the associated fringe from the base, whereas a three-tier allocation base includes the associated fringe. You may create both two-tier and three-tier pools simultaneously to meet your requirements.
If you use non-labor expenses as a base allocation for an overhead pool, for instance, travel expense as a means to allocate the cost of a travel department, you may do so by associating the desired general ledger accounts in the Account Assignment screen to create custom allocation pools.
In addition to overhead pools, GovBooks allows you to create value-added pools and service center pools. The flexibility of GovBooks allows you to create custom allocation methods and thousands of different indirect rate structures.