University of Minnesota Internal Sales Rate Development Process

Internal Sales Rate Development Procedure and Website Located at : Internal Sales EFS website: http://www.finsys.umn.edu/sales/int.html Administrative Procedure Establishing Internal Rates: http://policy.umn.edu/Policies/Finance/Accounting/INTERNALSALES_PROC03.html Internal Sales Training Module: http://www.finsys.umn.edu/sales/iso.html 2

Principles for Internal Sales Billing rates should be reviewed and updated each year. Rates charged to internal University customers must be set to break even. Rates must be consistent for all internal customers. The University is subject to periodic audit by the federal government to assure the federal government receives the lowest University, or internal rate for similar goods and services purchased at the University. Document subsidizes. 3

Internal Sales Rate Development Steps to developing an Internal Sales rate: Determine the measurable unit for goods and services Determine annual output or expected level of activity Determine annual estimated costs Determine the breakeven Exclude unallowable costs Determine the appropriate classification and include or exclude overhead costs (Recharge or Specialized Service) Determine the activity per-unit rate Rates should be reviewed, updated and submitted to Internal Sales each year 4

Internal Sales Rate Template 5