Beneficial or Causal Relationship Test Law and Legal Definition

The beneficial or causal relationship test is the accounting principle that all government contractors must follow when allocating indirect costs. [Perry v. Martin Marietta Corp., 47 F.3d 1134 (Fed. Cir. 1995)].

Pursuant to 48 CFR 9904.418-40 (c), pooled costs should be allocated to cost objectives in reasonable proportion to the beneficial or causal relationship of the pooled costs to cost objectives.