Q.  Is it possible to allocate the costs of the HR department to engineering and manufacturing as well as G&A?  My experience has been that HR is strictly a G&A cost. However, my coworkers say the costs can be allocated.  The FAR shows HR to be a G&A cost.

A.  I’m not sure where the FAR show HR to be a G&A cost but I would agree with your coworkers.   Both are normally acceptable - charging HR to G&A exclusively is quite common and charging some or all of HR to overhead pools is also quite common.  You could accumulate all HR costs in a cost pool and allocate the costs to engineering, manufacturing and G&A on a headcount basis.  Alternatively, you could have your HR executive in G&A and allocate remaining HR costs to one or both of the engineering and manufacturing pools.  Also, all HR costs can be assigned to G&A if you establish that as your practice.

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