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Center definitions

Billing rate:  An amount established to charge for specific services/products.

Internal billing rate (ASU rate): The rate charged to customers paying with funds which are under the fiscal oversight of ASU. May be subsidized or unsubsidized (see definitions below)

Minimum external billing rate: Based on the sum of direct and F&A costs. The direct cost portion of the rate is composed of fixed and variable components. The fixed component is determined by dividing total annual fixed costs by annual billing units at full-capacity operation so that each unit of activity includes only its allocable share of fixed costs (i.e. a pro-rated portion). The variable cost component is determined by dividing anticipated total annual variable costs by the anticipated number of units to be sold. To the sum of fixed and variable components, institutional F&A is added at the current F&A rate.

Subsidized billing rate: A rate that assumes some portion of a recharge center’s cost is paid by sources other than the recharge center account. This occurs when a center is not entirely self supported (e.g., receives partial support through State appropriations) as is characteristic of many Recharge Centers.

Unsubsidized billing rate: A billing rate that is calculated by dividing total cost allocated to a product or service by the number of units the recharge center expects to sell.

Billing unit: The basis on which services/products are offered (e.g., hours, unit price, etc).

Break-even period: A reasonable time-period over which cumulative revenue for a service/product equals cumulative expenses.

Carry-forward (cash reserves): The recharge account balance (+ or -) at the end of one fiscal year and the beginning of the next.

Cost definitions

Allowable costs: Costs that the federal government allows recharge centers to include in internal billing rates and to fund from recharge accounts.

Direct cost: Costs directly associated with and allocable to recharge center products and services. Includes depreciation of centers capital equipment and actual expenditures incurred for salaries and wages, employee related expense, operations, and travel, regardless of funding source (i.e. recharge account or subsidy).

Institutional facilities and administrative costs (‘F&A’): Costs associated with general university support functions. The three largest categories are general and  administrative (institutional administration), operations and maintenance, and college/departmental administration. General and administrative costs include executive management, payroll, personnel, purchasing, etc.  Operations and maintenance costs include routine building maintenance and custodial services, utilities, etc.  Other institutional F&A cost categories are sponsored projects administration, student administration and services, library, building depreciation, equipment depreciation, and interest expense related to capital.

Fixed cost: Cost remains the same regardless of the volume of products or services sold. For example, a technician’s salary or a service contract.

Variable costs: Costs that change proportionally to the volume of products or services sold. For example, supplies ordered as needed to perform an analysis.

Depreciation: The process of allocating the acquisition cost of a capital asset, net of residual or salvage value if applicable, over the estimated depreciable life. For ASU, depreciation is calculated using the capital value, recorded in institutional property records as the Total Asset Amount.

Acquisition cost: Cost of acquiring a capital asset, including taxes, freight, and installation costs to place the asset into use (see PCS 004 for definitions of capital equipment and assets).  For donated capital assets, acquisition cost is its fair market value at the time of the donation.

Depreciable life: The time period or units of activity over which the value of a capital asset is distributed (e.g., years, miles driven for vehicles, etc.) to determine annual depreciation.

External sales: Providing billable services/products to a Non-ASU Customer (e.g., DNA sequencing for Mayo Clinic researchers).

External sales premiums: The difference between internal and external (non-ASU) rates. 

Imputed revenue: Revenue not collected as a result of  billing rate discounts and/or surcharges. For example, the internal billing rate of a Recharge Center is $10 per hour, but users in the department that provides subsidy are only charged $5 per hour. Total use by these uses is 10 hours. The imputed revenue is $50 ($5 per hour discount X 10 hours).

Interdepartmental Purchase Orders (IDPO): IDPO’s allow University departments to procure services/products provided by a Recharge and charge them to another University account.

Net income: Total annual revenue less total annual expenses.

Non-ASU customers: Non-ASU customers represent individuals, groups, or organizations paying for services/products with funds other than state, local, and/or sponsored funds which are under the fiscal oversight of ASU.

Private enterprise: External business enterprises.

Products and services: Tangible items and activities offered by the recharge center to which costs are allocated and billing rates are assigned.