(a) Consumable items received from the supply system may be costed as billed by the supply agency. If
no billing is available, consumables will be costed at the standard inventory price as published in appropriate supply
manuals. Items procured from local sources will be priced at the latest invoice cost. Cost of items fabricated will be
based on actual cost for like items, where possible. When actual cost is not available, engineering estimates, including
indirect expenses, will be used.
(b) Replacement components and assemblies used in the repair process will be costed at the standard
inventory price. Credit will be taken for the return of the repairable component in an amount equal to the current standard
inventory price, less the estimated cost to repair the component.
(3) Freight and packaging. Freight will not be included as an element of cost when the equipment to be
repaired is located in CONUS. When the equipment to be repaired is located overseas and no local capability to repair
exists, the cost of freight to CONUS will be included as an element of cost. The cost of freight includes all cost involved in
preparing the item for shipment at point of use, and all transportation and handling cost from point of use to designated
CONUS point of repair. When equipment cannot be repaired on site, and cost must be incurred to prepare the equipment
for shipment regardless of destination, such cost (including materials) will be included in the estimate of cost to repair.
b. Indirect Costs. Indirect cost to be included will be determined by applying the indirect expense rates to the
estimated direct labor hours. The cost to repair will include the following indirect expenses.
(1) Indirect maintenance expense rate. This will include manufacturing or production expenses (i.e., indirect
costs incurred within or identifiable to the maintenance shop or organization performing the repair work, although not
identifiable to particular jobs).
(2) General and administrative expense rate. This will include the costs incurred in the general management or
supervision of the installation as a whole which are allocated among maintenance and other activities.
c. Miscellaneous Costs. The cost of repair will include all contractual services acquired incidental to and identifiable
with the performance of all or a portion of the specific maintenance job. Any other charges required to accomplish the
repair and directly identifiable to the equipment will be included (although not specifically; mentioned herein), except those
directly named in d below.
d. Exclusions. The following costs will not be included in the estimate of cost to repair.
(1) Replacement of basic issue list items.
(2) Items of operating expense, such as the replacement of tires, batteries, petroleum products, and tools,
except where replacement is the result of accidental damage.