Full Cost Recovery is a method of calculating the cost of your services, to inform your pricing decisions.
You need the full budget for your organisation before you can start the calculations.
There are 4 steps to the process:
- Identify the different projects / cost centres
- Identify their direct costs
- Share the overheads, using an appropriate basis of apportionment
- Total the costs for each project / cost centre
The unit cost (for each output from the project / cost centre) can then be calculated by dividing the total project / cost centre cost by the number of outputs.
This information can be used to inform pricing decisions (along with comparison to the market rates)
Help with full cost recovery
A range of services provided by WYCAS (West Yorkshire Community Accounting Service) are available to help your organisation with its full cost recovery including:
- Full Cost Recovery: Good Practice Guide
- Spread Sheet Tools which can assist in your calculations
- ‘The Price is Right training course’ run by a WYCAS tutor.
To find out more contact WYCAS.
Practical exercises to illustrate principles was excellent, I already understood (the) theory but that’s no alternative to actual practice”