Which type of costs are typically considered when determining a contract's allocability?

In determining a contract's allocability, incurred costs are typically the focus. Allocability refers to the ability to assign costs specifically to individual contracts based on the benefits received from those costs. Incurred costs are those that have already been realized and documented, representing actual expenditures that have occurred during the performance of the contract. This makes them crucial for accurate financial reporting and compliance with contract terms.

In contrast, projected, historical, and estimated costs are less reliable for determining allocability since they involve projections or past data that may not directly apply to the current contracting situation. Projected costs are based on future expectations, historical costs reflect expenditures from past projects that may not align with current contract requirements, and estimated costs are simply predictions of what costs may be incurred in the future. Therefore, relying on incurred costs provides the most accurate representation of what has been spent and justifies the allocation of expenditures pertinent to a contract.