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The sponsor has given approval to completely rebudget a technician's salary and all associated costs in order to purchase a piece of equipment. The amount budgeted for the technician's salary is $40,000. The institution has an F&A rate of 112% based on salaries and wages, and a fringe benefit rate of 31.2%. How much will be available for equipment?

a. $40,000
b. $52,480
c. $84,800
d. $97,280

User Maxandron
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1 Answer

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Final answer:

After accounting for the fringe benefits and F&A costs on the technician's $40,000 salary, the total amount available for purchasing equipment is $72,320.

Step-by-step explanation:

To calculate how much will be available for equipment after rebudgeting a technician's salary and associated costs, we need to consider both the fringe benefits and the Facilities & Administrative (F&A) costs. The technician's salary is $40,000, the fringe benefits rate is 31.2%, and the institution's F&A rate is 112% of salaries and wages.

The fringe benefits would be $40,000 × 31.2% = $12,480. Adding the fringe benefits to the salary gives us the total salary plus benefits: $40,000 + $12,480 = $52,480.

Then, we need to calculate the F&A costs on the salary: $40,000 × 112% = $44,800. The total amount including F&A costs, but before subtracting fringe benefits: $40,000 + $44,800 = $84,800.

Now, we have the total amount calculated including F&A but before accounting for the fringe benefits already included in our first total ($52,480). To find the amount available for equipment, we must not double-count the fringe benefits. Therefore, we subtract fringe benefits from our last calculation: $84,800 - $12,480 = $72,320. Thus, the total amount available for equipment, after accounting for the technician's salary, F&A costs, and fringe benefits, is $72,320.

User Haroldas
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