Cost Allocations Using Multiple Factors: The Cost Accounting Standards Board has concluded that certain indirect costs that cannot be related to a government contract by any other manner are to be charged to the contract based on a three-factor formula. The three factors are property. payrolls, and "all other costs" charged to the contract. These factors are entered into three fractions. The three fractions are summed and the sum divided by three. The result of this operation is the portion of these costs that are chargeable to the contract.

Stealthy Products, Inc., has a secret government contract. The company also engages in other activities. During the past year, it incurred $650,000 in costs chargeable to the government contract other than costs that must be allocated based on the three-factor formula. The company incurred a total of $812,500 in this "all other cost" category of costs.

In addition, Stealthy used $2 million of its $3 million in property for the government contract. Payrolls of employees engaged in the government contract amounted to $390,000 out of total payrolls of $468,000. Stealthy's costs subject to the three-factor formula are $122,000.

Required: How much of the $122,000 is chargeable to the government contract using the three- factor formula? (See Illustration 4-3 for an example.)