19 CFR § 10.178 - Direct costs of processing operations performed in the beneficiary developing country.

---
identifier: "/us/cfr/t19/s10.178"
source: "ecfr"
legal_status: "authoritative_unofficial"
title: "19 CFR § 10.178 - Direct costs of processing operations performed in the beneficiary developing country."
title_number: 19
title_name: "Customs Duties"
section_number: "10.178"
section_name: "Direct costs of processing operations performed in the beneficiary developing country."
chapter_name: "U.S. CUSTOMS AND BORDER PROTECTION, DEPARTMENT OF HOMELAND SECURITY; DEPARTMENT OF THE TREASURY"
part_number: "10"
part_name: "ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE, ETC."
positive_law: false
currency: "2026-04-05"
last_updated: "2026-04-05"
format_version: "1.1.0"
generator: "[email protected]"
authority: "19 U.S.C. 66, 1202 (General Note 3(i), Harmonized Tariff Schedule of the United States (HTSUS)), 1321, 1481, 1484, 1498, 1508, 1623, 1624, 4513."
regulatory_source: "28 FR 14663, Dec. 31, 1963, unless otherwise noted."
cfr_part: "10"
---


# 10.178 Direct costs of processing operations performed in the beneficiary developing country.

(a) *Items included in the direct costs of processing operations.* As used in § 10.176, the words “direct costs of processing operations” means those costs either directly incurred in, or which can be reasonably allocated to, the growth, production, manufacture, or assembly of the specific merchandise under consideration. Such costs include, but are not limited to:

(1) All actual labor costs involved in the growth, production, manufacture, or assembly of the specific merchandise, including fringe benefits, on-the-job training, and the cost of engineering, supervisory, quality control, and similar personnel;

(2) Dies, molds, tooling, and depreciation on machinery and equipment which are allocable to the specific merchandise;

(3) Research, development, design, engineering, and blueprint costs insofar as they are allocable to the specific merchandise; and

(4) Costs of inspecting and testing the specific merchandise.

(b) *Items not included in the direct costs of processing operations.* Those items which are not included within the meaning of the words “direct costs of processing operations” are those which are not directly attributable to the merchandise under consideration or are not “costs” of manufacturing the product. These include, but are not limited to:

(1) Profit; and

(2) General expenses of doing business which are either not allocable to the specific merchandise or are not related to the growth, production, manufacture, or assembly of the merchandise, such as administrative salaries, casualty and liability insurance, advertising, and salesmen's salaries, commissions, or expenses.

[T.D. 76-2, 40 FR 60049, Dec. 31, 1975]