Establishing Testing Rates

Billing Rates

The following information is intended to offer assistance in developing or updating your internal service billing rate(s) for services rendered. Contact Jacque Shoppell in DER for assistance [shoppell@egr.msu.edu]

Development of Billing Rates(s)

1. The billing rate must be determined with a method that does not discriminate against federally supported activities.

2. Federal regulations prohibit charging billing rate(s) that recover more than the cost of the service or include a component for depreciation based on replacement costs.

3. The billing rate cannot include a component for interest expense on internal University loans. Interest expense to external parties may be allowable, if the piece of equipment was purchased on or after July 1, 1982, and its cost was $10,000 or more.

4. Departments rendering services to all other users may include a component for depreciation.

Documentation of Billing Rate(s)

1. Supporting schedules documenting the development of the billing rate(s) should be sent to Jacque Shoppell in DER [shoppell@egr.msu.edu] . The information must include a breakdown by billing rate components, the estimated unit used to arrive at the unit cost, and the unit cost. (See example below.). Rates can be set up as $$/hour for lab use or $$/sample. When the Controller's office has approved the rates, you will be notified.

2. The rates should contain a statement to the effect that, the billing rate(s) will be reviewed at a minimum, on a biannual basis, with the rates being adjusted to reflect costs, number of units, or the projected costs/unit, etc. for the next year. Also indicated if the rates are for off campus users only.

Example of Internal Service Billing Rate Documentation

Department Name
Date

The billing rate charged for services rendered is composed of the following components:

Salaries & Wages:

Principal Technician ($500/week x 52) $26,000
Support Technicians (2@$350/week x 52) $36,400
Administrative Assistant ($1500/mth x 30% x 12) $ 5,400
Equipment Usage/Rental* $ 1,000
Supplies $ 2,500
Travel to be reimbursed at actual rate  

Total Cost of Service $71,300

*Please list equipment and indicated cost by test or hourly rate.

The estimated number of samples run during the year are: 10,000
The cost per sample: $71,300/10,000 = $7.13

The estimated number of samples and the costs of the service will be reviewed on a biannual basis to ensure that the estimates still reflect the current activity.