How should I calculate indirect costs when I am creating a budget based on a fixed total project amount?
If you are developing a proposal budget based on a fixed total project amount that you will request from a sponsor, the breakdown between direct and indirect costs is calculated as follows: Example 1: Total project budget is capped at $100,000. Overhead rate paid by the sponsor is 20%. $100,000/1.20 = $83,333 direct costs. $83,333 direct costs * .20 = $16,667 overhead $83,333 direct costs + $16,667 overhead = $100,000 total project budget. Example 2: Total project budget is capped at $50,000. Overhead rate paid by the sponsor is 68%. $50,000/1.68 = $29,762 direct costs. $29,762 direct costs * .68 = $20,238 overhead $29,762 direct costs + $20,238 overhead = $50,000 total project budget.
Related Questions
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- Does the Mott Foundation support indirect costs of a project, and if so, what is the upper limit to such costs as a budget item?
- How should I calculate indirect costs when I am creating a budget based on a fixed total project amount?
