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Direct Selling Costs


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Hi,

I have sales commissions that were paid to foreign agents. The payments were definitely for a specific contract award. Shouldn't I charge these costs direct to the commericial contract that I won, as "DIRECT SELLING COSTS" ... thereby putting the costs in my G&A BASE, and NOT put them in my BD costs, which would increase my G&A pool? These are costs for products that would be sold in the US also, so even before the FAR change to 31.205-38 either way they apply. Please help!!

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Hi,

I have sales commissions that were paid to foreign agents. The payments were definitely for a specific contract award. Shouldn't I charge these costs direct to the commericial contract that I won, as "DIRECT SELLING COSTS" ... thereby putting the costs in my G&A BASE, and NOT put them in my BD costs, which would increase my G&A pool? These are costs for products that would be sold in the US also, so even before the FAR change to 31.205-38 either way they apply. Please help!!

CPA1012,

Where you choose to allocate the costs of foreign commissions is a matter of your cost accounting practices (established or disclosed) and compliance with any CAS clauses in your contracts. The fact that the costs are called "DIRECT SELLING COSTS" does NOT mean that they must be charged as direct costs. Direct selling costs are distinguished from general marketing and sales costs. It's a form thing and should not affect your direct/indirect charging decision.

Hope this helps.

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