Multifamily Housing Program Financial Management Toolkit

Knowledge Check – Indirect Costs

Select the appropriate response to complete the statement and then, select the Submit button.

1. HUD programs set specific limits on the amount of funds spent on administrative costs so it is important to separate program costs from administrative costs.


2. One difference between direct costs and indirect costs is that direct costs:

A. Are incurred for common/joint objectives and cannot be identified with one particular activity; indirect costs only partially pertain to the activity.
B. Are identified expressly with a given activity; indirect costs are incurred for common/joint objectives and cannot be readily identified with only one certain activity.
C. Pertain to the grant’s budget; indirect costs are incurred for activities that do not relate to the HOPWA grant.
D. Are shared in an organization; indirect costs relate to other parts of the organization.

3. One difference between personnel costs and non-personnel costs is that personnel costs:

A. Are generally documented by time and activity reports; non-personnel costs are documented by other types of sources.
B. Are partially reimbursable through a HUD grant or contract; non-personnel costs are completely reimbursable through a HUD grant or contract.
C. Include office space and transportation costs; non-personnel costs include other costs that could be prorated according to the percentage of eligible households served.
D. Must have supporting documentation, while non-personnel costs do not need supporting documentation.

4. Managing non-personnel costs can be challenging due to all of the following reasons, EXCEPT:

A. Non-personnel costs often benefit more than one program or fund.
B. Financial management principles require these costs to be allocated (or divided) among the various programs or funds.
C. Managing non-personnel costs is so similar to personnel costs.
D. Both the allocation process and the documentation required to support the allocations are common areas where mistakes occur.