Justifying One Company-Wide Overhead Rate - The Litton Case
A seminal case, Litton Systems, Inc. ASBCA 37131, explicitly established that CAS 418 does not require separate indirect expense pools be established for each location. The Board stated, in part " the standard does not mention the location of cost incurrence as a relevant factor, nor is it relevant from a purely conceptual view." Further, "nothing in CAS 418 or any other standard indicates that location of facilities or cost levels of operations has any effect on the characteristics of homogeneity of indirect cost pools."
The client prevailed.
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