Which costs are included in a contractor's fully burdened rate but are not direct costs?

• A. G&A and fringe benefits
• B. Direct materials
• C. Subcontract costs
• D. Travel reimbursements

Answer: (B)

Fully burdened rate combines direct costs with indirect costs. Direct costs are costs that can be traced to a specific contract, such as direct materials and direct labor. Indirect costs are those that support multiple contracts and aren’t tied to one job; these are allocated into the burdened rate as overhead, including General & Administrative expenses and fringe benefits. So, the costs included in the fully burdened rate that are not direct costs are the indirect ones like G&A and fringe benefits. Direct materials, subcontract costs, and typical travel reimbursements are treated as direct costs or reimbursable expenses rather than part of the indirect portion.