INSTRUCTIONS FOR PREPARING THE STANDARD FORM OF CONTRACTOR'S REPORT Continued reserve for depreciation, other major reserves stated as separate amounts with their purposes clearly captioned, and details of the capital accounts. The income statement should show: (a) Gross sales, less discounts, returns and allowances, in accordance with trade or company practice; (b) Cost of goods sold, including opening and closing inventories and a classification of manufacturing cost and factory burden; and (c) A list of selling and administrative expenses and miscellaneous items. Item II-A-1. Direct sales to the departments named in the act under renegotiable prime contracts, including purchase orders: (a) Fixed price: Sales (less discounts, returns, and allowances) under fixed-price contracts (including purchase orders) should be entered on line II-A-1 (a). (See item II-A-1-(c). Below.) (b) Cost-plus-a-fixed-fee contracts: Total billings (cost, plus fees) on CPFF contracts should be entered on line II-A-1-(b). (c) Other direct sales: (For example, under contracts which contain incentive provisions or provide for escalation, redetermination or other price revisions) should be entered on line II-A-1-(c). Price redetermination: If RB Form 1B reflects either direct or indirect price redetermination contracts, advise the amount of redeterminable sales so reported and the estimated profit applicable thereto. (This information should be furnished in your transmittal letter. If there are no such sales so advise.) NOTE.-In determining the amount of your sales, do not adjust for any claims you plan to make attributable to increment in value of excess inventory. Advise in letter of transmittal whether or not you intend to make such a claim. (See RBR 1453.2 (d)). Item II-A-2. Indirect sales: Sales (less discounts, returns and allowances) under renegotiable subcontracts of any tier, including purchase orders, except those shown in line II-A-3 and II-A-5 below, should be entered on line II-A-2. Total billings under CPFF subcontracts should also be included in II-A-2. Item II-A-3. Other renegotiable business: Receipts or accruals of income, such as royalties, management fees, etc., subject to renegotiation, should be entered on this line. Item II-A-4. Sales, etc., subject to renegotiation: Enter the sum of items II-A-1, -2, and -3 on this line. Item II-A-5. Commissions and other income, subject to renegotiation: Receipts or accruals of income, such as commissions, agent's fees and other income from subcontracts of the types described in sec. 103 (g) (3) of the act. Such subcontractors will not report item II-A-1 or II-A-2 except to the extent that they have made sales as principals. Item II-B. Sales, etc., not subject to renegotiation: Sales (less discounts, returns and allowances) not subject to renegotiation should be entered on this line. Sales of standard commercial articles or services for which exemption is claimed (see item IV) should be included in the amount entered on this line unless such claim has previously been denied by the board. Item II-C. If your total sales, etc., shown on line II-C are not in agreement with sales as shown in your published income statement or in your audit report, submit a reconciliation of such variation. Item III. Statement of income exhibit 1 and la (RB form 1B): See separate instructions on RB form 1c. Item IV. This item must be completed in all cases. If the standard commercial article or service exemption is applicable and is not waived, sales of such articles or services should not be included in the renegotiable sales reported in item II-A, but the amount (actual or estimated) of standard commercial article or service sales must be set forth in item IV. If claim-for exemption is waived or has previously been denied, the sales of standard commercial articles or services should be treated as any other renegotiable sales and included in the appropriate line of item II-A. For specific instructions concerning the form and filing of the standard commercial article report or the standard commercial service report, see RBR 1467.4, and RBR 1467.9. Item V. Self-explanatory. Item VI. In developing this information it should be noted that only estimated dollar amounts are requested. If you sell more than one product or render more than one service, list both your principal renegotiable and nonrenegotiable items. Item VII. This report must be prepared in accordance with the method of accounting you used for Federal income tax purposes unless the Board, in the course of previous renegotiation proceedings, has permitted you to adopt a different method for renegotiation or unless you request permission pursuant to RBR 1459.1 to use for renegotiation a different method of accounting from that which you used for Federal income tax purposes for the RB Form 1A (Rev. 10-54) The Renegotiation Board INSTRUCTIONS FOR PREPARING THE STANDARD FORM OF CONTRACTOR'S REPORT Continued fiscal year to which this report relates. If you submit such a request with this report, you may file this report on the basis of the method of accounting so requested. Item VIII. Segregation of sales: A clear and specific description of the methods used in the segregation of renegotiable and nonrenegotiable sales is one of the most important aspects of this report. A mere statement that you segregated your sales is not acceptable. It is necessary that you explain the methods used and describe specifically how it was applied to your business. Items IX and X. Self-explanatory. Item XI. Principal officers, for the purpose of signing this form, are the president, vice-president or treasurer. If the form is signed by any other officer in lieu of a principal officer, documentary evidence of his authority to do so should be submitted. Forms not properly executed will be returned. STANDARD COMMERCIAL ARTICLES OR SERVICES (SEE ITEM IV ABOVE) Under the Renegotiation Act of 1951, as amended September 1, 1954, and August 3, 1955, receipts or accruals after December 31, 1953, from contracts and subcontracts for standard commercial articles and services are exempt unless the Board finds that competitive conditions affecting the sale of such articles or services are such as will not reasonably prevent excessive profits. Such findings must be made by the Board within six months after the contractor files a complete and satisfactory standard commercial article report or standard commercial service report prescribed by the Board. A standard commercial article is defined in the act to mean an article (1) Which, in the normal course of business, is The term "identical in every ma- manufactured of the same or substitute materials, and having the same industrial or commercial use or uses, without necessarily being of identical specifications. The term "persons" does not include any person under control of, or controlling, or under common control with any other person considered for the purposes of this exemption. A standard commercial service is defined in the act to mean a service Which is customarily performed by more BROKERS AND AGENTS If you are a broker or manufacturers' agent, omit item VI, and furnish the following information for the year under review: Sales volume, renegotiable and nonrenegotiable, on which the commissions reported were based, listing separately renegotiable sales and commissions by major principals; a description of the product sold or a detailed description of the services rendered; a description of the basis than two persons for civilian industrial or commercial requirements, or is reasonably comparable with a service so performed; the term "service" means any processing or other operation performed by chemical, electrical, physical, or mechanical methods directly on materials owned by another person. The term "reasonably comparable" means of the same or similar kind, performed with the same or similar materials, and having the same or a similar result, without necessarily involving identical operations. used in computing commissions or fees, and if the basis of computation for renegotiable business differs from that for nonrenegotiable business, explain. Also furnish for each of the previous 3 years, commissions and fees received, sales as principals, if any, total gross income, total expenses, and net income before Federal income tax. The Renegotiation Board RB Form 1A (Rev. 10-54) EXHIBIT I-STATEMENT OF INCOME (See Instructions RB Form 10) (To Accompany Standard Form of Contractor's Report-RB Form 1) NOTE. A reconcilement of any differences between income per books (Line 18 Column A) or audit report and income per Federal income tax return (Line 20 Column A) should be sub- The Renegotiation Board RB Form 1B 24. Other charges included above: a. Amortization under necessity certificates.. b. Total officers' compensation including bonuses, etc. c. Approx. amount of work subcontracted included in cost of sales.. 25. There is attached, in duplicate, a full description of the methods used in allocating costs of goods sold and expenses between renegotiable and non-renegotiable business. The Renegotiation Board INSTRUCTIONS FOR PREPARATION OF EXHIBITS I AND I (a) RB FORM 1B NOTE.-These exhibits are to be considered as a guide in preparing the segregated statement of income and should be expanded to the degree necessary to properly portray your business. However, the account classification should be adhered to where appropriate. EXHIBIT I. STATEMENT OF INCOME General.-When the contractor is engaged in more than one type of renegotiable business producing articles of a widely divergent nature or operates on a divisional basis, schedules showing operating results by separate fields of activity should be submitted to supplement Exhibits I and I (a). Renegotiable sales.-Opposite line A, titled "Prime contracts including purchase orders" enter in appropriate columns direct sales shown on lines II-A-1-(a), (b), and (c), of RB Form 1. NOTE.Sales under cost-plus-a-fixed-fee contracts (CPFF) are total billings and related accruals, including fees. Column D should be used for contracts which contain incentive provisions or provide for escalation, redetermination or other revisions during the life of the contract shown on line II-A-1-(c) RB Form 1. Opposite line B, titled "Subcontracts including purchase orders" enter in appropriate columns indirect sales shown on line II-A-2 RB Form 1. Opposite line C, titled "Commissions" enter in appropriate columns receipts or accruals of income shown on line II-A-5 RB Form 1. Opposite line D, titled "Other renegotiable business" enter in appropriate columns amount shown on line II-A-3 RB Form 1. Receipts and accruals, estimated if necessary, relative to the uncompleted portions of terminated contracts or subcontracts should be set out in a separate column under the appropriate caption, CPFF or fixed price. If these include amounts based on subcontractor's own claims, the aggregate of the latter should be shown as a footnote to Exhibit I. Line 1.-Enter total renegotiable and nonrenegotiable sales on line 1, in the appropriate columns. If your aggregate net sales shown on this line are not in agreement with sales shown in your published income statement or your audit report, submit a reconciliation of such variation. Sales for which exemption has been claimed (and not denied) pursuant to the standard commercial article or service exemption (item IV, RB Form 1) are to be included in column (E) with non-renegotiable business. Lines 2,3,4, and 8.—In allocating costs and expenses between renegotiable and non-renegotiable business, the contractor's cost system, if adequate, should be employed. Otherwise, percentages or other formulae may have to be used, either as to individual products or groups of products, or by departments, divisions, etc. Each major item of selling and general expenses should be allocated in accordance with the most equitable method in view of the particular situation. The amounts reported in column (B) should be those costs and expenses paid or incurred and allocated to CPFF contracts in accordance with the contractor's system of accounts, The Renegotiation Board rather than the amount of reimbursable cost and expense. Line 9.-If the profit margin varies significantly between renegotiable and non-renegotiable business, other than CPFF, explain. Lines 10 and 18.-Enter amounts representing nonoperating income and expenses, such as interest, dividends, etc. EXHIBIT I (a): DETAILS OF EXHIBIT I Lines 91a to g, cost of goods sold.—The cost of goods sold summary as set forth contemplates the summarization of the cost of goods sold by elements, namely, material, direct labor and mfg. expenses, the latter to be itemized on a separate schedule. Where unit costs are compiled, an overall approximation (expressed either in dollars or percent) of the material, labor, and overhead elements will be sufficient. Describe cost accounting system or data (job order, process, standard costs, etc.), and if not used for allocation of cost of goods sold justify reason for deviation. State whether your cost accounting system is under general ledger control. Explain any significant changes made during the fiscal year in the accounting method of allocating costs to company products. Line 88-Selling and advertising expenses.—With regard to such expenses explain method used in allocation to renegotiable business. If the contractor's accounts contain any significant amounts included under captions not listed, a separate schedule should be submitted. Salaries should include all forms of compensation, that is, salaries, bonuses, etc. Line 22b.—Applies only to commissions to nonemployees such as brokers, selling or manufacturers' agents, etc. If amounts allocable to renegotiable business are significant submit a schedule showing the name, address and the renegotiable amount for each agent, etc. Line 28-General and administrative expenses.Explain method used in allocation to renegotiable business. Should the captions and lines provided be considered inadequate, a separate schedule should be submitted, in line with the classifications customarily used by the contractor. Line 94-Other charges included above.-The allocation of these items to renegotiable and nonrenegotiable business should be on the same basis as reflected in the classifications above. In the event that the exact allocations cannot be determined without great effort, the best estimate of the contractor should be submitted with an explanation of how the estimates were computed. Line 95.-Furnish a comprehensive description of the methods used or basis employed in allocating costs of goods sold and other income and deductions to renegotiable business. RB Form 10-Rev. 8-55 |