The formula to calculate the Indirect Cost Rate (ICR) is:
\[ ICR = \frac{TIE}{DC} \]
Where:
The Indirect Cost Rate (ICR) is a measure used to allocate indirect costs to direct costs. It is calculated by dividing the total indirect expenses by the direct cost base. This rate helps organizations understand the proportion of indirect costs relative to direct costs, which is crucial for budgeting, pricing, and financial analysis.
Let's say the total indirect expenses (TIE) are $50,000, and the direct cost base (DC) is $200,000. Using the formula:
\[ ICR = \frac{50000}{200000} = 0.25 \]
So, the Indirect Cost Rate (ICR) is 0.25 or 25%.