Breakeven – The point where revenues equal expenses; where there is no surplus or deficit.
Breakeven Analysis – The process of determining the volume at which a program becomes financially self-sufficient.
Break-even Period – A reasonable time-period in which cumulative revenues for a good/service should equal cumulative expenses. For a deficit carry-forward this period is five years unless an exception is approved. For a surplus carry-forward this period is three years.
Capacity – The maximum volume of production or service your fixed resources can accommodate.
Capital Equipment – Tangible, nonexpendable property having a useful life of more than two years. Equipment may be a single item, a constructed (i.e., fabricated) item or several components that produce one unit. The WUSTL equipment acquisition cost threshold is $5,000.
Carry-Forward – The cumulative difference between the revenue generated by a service/product and the cost of providing the service/product.
Core Facility – Shared resource that provides access to instruments, technologies, services, as well as expert consultation. Core facilities may be financially supported by institutional funds, federal funds, external revenues, other funding, or any combination of these. The core facility term is most often used in the research realm. Service center or recharge center (if fees are charge to users) are terms that carry the same general definition.
Customers (also referred to as service users): There are two classes of customers:
- Internal customer- A department of WUSTL (including academic, research, administrative, and auxiliary departments) that purchases services/products to support a program or activity. An internal user pays for services/products via a WUSTL account/fund via an interdepartmental billing (ID).
- External customer- Individuals, groups, or organizations that are not part of the Washington University community. An entity or person that is legally separate from WUSTL which typically purchases services/products for reasons of convenience or uniqueness of the services/products offered. Examples of internal customers include students, faculty or staff acting in a personal capacity, other universities, and for-profit corporations. Outside parties acquire services/products from WUSTL departments or recharge and service centers via external invoicing.
Deficit – An amount by which a center’s expenses exceed its revenues.
Depreciation – A method for apportioning the cost of property and equipment over the estimated useful lives of the assets.
Expenses – Costs incurred to operate a service or recharge center, whether paid or accrued.
Fee-for-service – A payment model where services are unbundled and paid for separately.
Fixed Costs – Costs that are incurred regardless of volume or activity (e.g., capital equipment, equipment service agreements).
Internal Billing – An AISystem Interdepartmental Order (IDO) transaction whereby a WUSTL departmental account is charged for services/products provided by other WUSTL departments or centralized service centers.
Inventory – Goods or materials on hand that are (1) available for sale or (2) utilized in the production of services/products that are then made available for sale.
Maintenance Agreement – Sometimes referred to as a service contract, a maintenance agreement is an agreement which requires the specific performance of repairing, cleaning or altering equipment on a regular or irregular basis to ensure its continued satisfactory operation. The cost of a maintenance agreement for equipment sued to provide research core services is considered a fixed cost, and is an allowable cost to be included in the development of the recharge service rate.
Marginal Costs– The additional costs incurred as a result of providing one more unit of service.
Measureable Units – A given physical quantity used as a standard of measurement. The unit must be something that can be measured, quantified, and tracked in a reasonably accurate manner. A measurable unit must be identified bill users for actual usage. Unit examples include: test, liquid volume, sequence, machine hour, consultation hour.
Non-Discriminatory Pricing – A pricing method that charges all users the same rate for the same service or product under the same circumstances.
Non-recoverable Costs – Expensed that are not allowed to be included in rate calculations per guidelines/policies because they are not allowable on federal grant funds. RCs/SSFs must be managed in accordance with OMB Uniform Guidance CFR, Part 200, Subpart E applying the standard rules regarding unallowable costs (e.g. bad debts, entertainment, etc.).
Operating Costs – Expenses related to the operation of the RC/SSF, such as salaries, supplies, chemicals and service/maintenance contracts.
Overhead – Charge from Dean/School/Department assessed on revenues generated when providing a RC/SSF service/product to an entity outside of WUSTL. This charge is for a share of indirect expenses in the central areas.
Program Income – Gross income earned by a grantee, a consortium participant, or a contractor under a grant that was directly generated by the grant-supported activity or earned as a result of the award. Such income needs to be budgeted in a separate account (cost sharing) associated with the related sponsored project account(s).
Product – A tangible item that is made, grown, cultured or converted or otherwise provided for sale.
Rate – A fee or unit price used to recover the costs of providing services/products.
Recharge Center – An operating unit that provides goods or services to generally localized users for a fee, thus, “recharging” the user for costs incurred to deliver the service or develop the product. Such centers provide services/products primarily to WUSTL departments/investigators, but which could also be offered to external customers.
- Recharge Center (RC) – Minor
University operating units that provide services/products primarily to WUSTL departments/investigators. Total annual revenue/expense credits are less than $250K.
- Recharge Center (RC) – Major
University operating units that provide a substantial volume of services/products primarily to WUSTL departments/investigators. Total annual revenue/expense credits are greater than $250K.
Recoverable Costs – A cost incurred by a service or recharge center that is recoverable from users and is included in the rate computation.
Revenues – Amounts recovered from the sale of services/products, whether received or accrued.
Service – An intangible commodity, something that you can’t hold in your hand but which provides value such as time on a microscope, cryopreservation storage, data storage, CPU time, or consultation.
Service Center – An operating unit established to provide services/products to other university programs and activities.
Specialized Service Facility (SSF) – University operating units that provide highly complex services to WUSTL departments/investigators. Establishment of such a facility requires coordination with school, and institutional administrative offices, particularly the Cost Analysis Office. Total annual revenue/expense credits are greater than $1M.
Subsidy – A financial contribution made to a recharge/service center in order to create a benefit to users of that center, typically in terms of a reduced rate. The difference between the reduced rate paid by all or a defined group of users is the amount of the subsidy. The subsidy is paid by another source other than the user.
Surplus – An amount by which an RCC/SSF’s revenues exceed its expenses.
Unrelated Business Income Tax (UBIT) – Taxes assessed by the government on net income generated by a tax exempt organization which is unrelated to the tax exempt purpose of the organization.
Variable Costs – Costs that fluctuate in direct proportion with volume of services/products provided (e.g., materials and supplies).