# 2 C.F.R. § 200.404 (2026): Reasonable costs

> Federal · Regulations · In force

URL: https://www.frixlaw.com/law-library/statutes/CFR_T2_P200_S200_404

## Section

- **Citation:** 2 C.F.R. § 200.404 (2026)
- **Heading:** Reasonable costs
- **Jurisdiction:** Federal
- **Kind:** Regulations
- **Status:** In force
- **Text as of:** August 14, 2026
- **Source:** Compiled text
- **Location:** Title 2 CFR: Federal Financial Assistance / Chapter II: OFFICE OF MANAGEMENT AND BUDGET GUIDANCE / Part 200: UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS / Subpart E: Cost Principles / § 200.404: § 200.404   Reasonable costs.

## Text

A cost is reasonable if it does not exceed an amount that a prudent person would incur under the circumstances prevailing when the decision was made to incur the cost. In determining the reasonableness of a given cost, consideration must be given to the following:
(a) Whether the cost is generally recognized as ordinary and necessary for the recipient's or subrecipient's operation or the proper and efficient performance of the Federal award;
(b) The restraints or requirements imposed by such factors as sound business practices; arm's-length bargaining; Federal, State, local, tribal, and other laws and regulations; and terms and conditions of the Federal award;
(c) Market prices for comparable costs for the geographic area;
(d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the recipient or subrecipient, its employees, its students or membership (if applicable), the public at large, and the Federal Government; and
(e) Whether the cost represents a deviation from the recipient's or subrecipient's established written policies and procedures for incurring costs.

## Nearby sections

- [2 C.F.R. § 200.400 (2026) § 200.400   Policy guide.](https://www.frixlaw.com/law-library/statutes/CFR_T2_P200_S200_400.md)
- [2 C.F.R. § 200.401 (2026) § 200.401   Application.](https://www.frixlaw.com/law-library/statutes/CFR_T2_P200_S200_401.md)
- [2 C.F.R. § 200.402 (2026) § 200.402   Composition of costs.](https://www.frixlaw.com/law-library/statutes/CFR_T2_P200_S200_402.md)
- [2 C.F.R. § 200.403 (2026) § 200.403   Factors affecting allowability of costs.](https://www.frixlaw.com/law-library/statutes/CFR_T2_P200_S200_403.md)
- [2 C.F.R. § 200.404 (2026) § 200.404   Reasonable costs.](https://www.frixlaw.com/law-library/statutes/CFR_T2_P200_S200_404.md)
- [2 C.F.R. § 200.405 (2026) § 200.405   Allocable costs.](https://www.frixlaw.com/law-library/statutes/CFR_T2_P200_S200_405.md)
- [2 C.F.R. § 200.406 (2026) § 200.406   Applicable credits.](https://www.frixlaw.com/law-library/statutes/CFR_T2_P200_S200_406.md)
- [2 C.F.R. § 200.407 (2026) § 200.407   Prior written approval (prior approval).](https://www.frixlaw.com/law-library/statutes/CFR_T2_P200_S200_407.md)
- [2 C.F.R. § 200.408 (2026) § 200.408   Limitation on allowance of costs.](https://www.frixlaw.com/law-library/statutes/CFR_T2_P200_S200_408.md)
- [2 C.F.R. § 200.409 (2026) § 200.409   Special considerations.](https://www.frixlaw.com/law-library/statutes/CFR_T2_P200_S200_409.md)
- [2 C.F.R. § 200.410 (2026) § 200.410   Collection of unallowable costs.](https://www.frixlaw.com/law-library/statutes/CFR_T2_P200_S200_410.md)
- [2 C.F.R. § 200.411 (2026) § 200.411   Adjustment of previously negotiated indirect cost rates containing unallowable costs.](https://www.frixlaw.com/law-library/statutes/CFR_T2_P200_S200_411.md)
- [2 C.F.R. § 200.412 (2026) § 200.412   Classification of costs.](https://www.frixlaw.com/law-library/statutes/CFR_T2_P200_S200_412.md)
- [2 C.F.R. § 200.413 (2026) § 200.413   Direct costs.](https://www.frixlaw.com/law-library/statutes/CFR_T2_P200_S200_413.md)

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Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/CFR_T2_P200_S200_404. Check the current official text before relying on it. Not legal advice.