To calculate costs when an award specifies indirect costs as a percentage of total direct costs, use the following 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 54%, excluding equipment

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

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 1.54 equals $51,948 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 $51,948 equals $28,052 in indirect costs.
4. Allocate amounts and check your math. All allocations should add up to the total award amount.
   • In this example, the three allocations add up to $100,000:
     • $20,000 to the equipment account
     • $51,948 to the remaining expenditure accounts (direct cost)
     • $28,052 to the indirect cost account