Always use a Modified Total Direct Cost (MTDC) base when you are using rates from the University of Arizona Facilities & Administrative (F&A) cost rate. Use a Total Direct Cost (TDC) base when you are using a reduced F&A rate and/or when the program announcement specifies.

Some sponsors will only reimburse an F&A rate lower than the federal negotiated rate. In these instances, the F&A rate should be applied to a total direct cost (TDC) base. There may also be instances where a sponsor requires that specific direct costs be excluded from the F&A cost calculation (Total Direct Costs less Exclusions).

Please see the Facilities and Administrative (F&A) Costs page for information on exceptions to the University’s negotiated F&A rates.

Contact Sponsored Projects & Contracting Services for assistance.

## Modified Total Direct Cost (MTDC)

Modified Total Direct Cost (MTDC) is defined by the F&A rate agreement and consists of all:

- Salaries and wages
- Fringe benefits
- Materials and supplies
- Services
- Travel, and
- Up to the first $25,000 of the each subrecipient (regardless of the period covered by the subrecipient)

The following are excluded from the MTDC calculation:

- The portion of each individual subaward greater than $25,000. An individual grant or contract may include several subawards.
- Equipment with an estimated life of one or more years and an acquisition cost of $5,000 or more, including components for fabrication of equipment which cost $5,000 or more,
- Patient Care Charges
- Tuition remission
- Rental Costs of off-site facilities
- Capital Expenditures

To determine the MTDC base, take the total project direct cost, subtract any costs that are listed as excluded, and multiply that new total by the F&A rate.

## Total Direct Costs (TDC)

Total direct costs (TDC) include all costs charged to a sponsored project, excluding F&A costs. To determine the total project cost base, the TDC is multiplied by the F&A rate to determine the F&A costs. The TDC and the F&A costs are then added to obtain the total project costs.

## Total Cost (TC):

This base is determined using total project cost. Used when the sponsor states that only a certain percentage of Total Project Costs can be charged for indirect (F&A) costs. When F&A cost reimbursement is limited to less than the University's full, applicable F&A rate, the sponsor required F&A rate should be applied to the total direct cost base rather than the modified total direct cost base (no exclusions) unless the program announcement states that a different method must be used for calculating F&A.

### Formula for Converting TC to TDC:

= (Rate in decimal form)/(1-Rate in decimal form)

For example: the sponsor has a stipulated rate of 10% Total Costs, the following is the conversion to TDC:

=.10/(1-.10)=11.11% TDC