Recharge Operation Accounting Protocol

Table of Contents

 

Consumption/Output Method

Under this method, rates are distributed on the basis of a unit of consumption such as hours, pounds or gallons used in the production process or on the basis of output such as the projected number of units to be produced for the year. The following is an example of a rate calculation under this method.

 

CONSUMPTION/OUTPUT RATE CALCULATION
ILLUSTRATION

The Box Shop recharge is establishing the following expenditure budget for fiscal year 200x

 

Box Shop Recharge
Expenditure Budget 200x
(Includes only those expenditures allowable for cost recovery.)
 
 
 
Budget
Materials
$
6,000  
Personnel Costs
60,000  
Services
9,000  
Supplies
2,500  
Travel
2,000  
Lease and Rental
3,000  
Occupancy and maintenance
2,000  
Depreciation
1,500  
Prior year fund deficit/<balance> if any
<1,900>
Total expenditure budget for 200x
$
84,100  

 

 

 

Box Shop Recharge
Billable Hours Calculation

The calculation to determine the total number of labor hours (i.e., billable hours) available for box production is as follows:

 

Total number of hours available
per person per year
(37.5 hours/week * 52 weeks/year)
1950.0
 
hours/person/year
     
   
Less: Vacation time  
(112.5)
   
  Personal holidays  
(37.5)
   
  University holidays  
(225.0)
   
  Estimated sick time
(15.0)
   
  Other non-billable time
(37.5)
 
         
Billable hours per employee
1522.5
 
billable hours/person/year
   
 
Times number of employees assigned
 
to the process
x
2
 
         
Total billable hours for department
3045
   
 

 

 

Box Shop Recharge
Rate Calculation

Once the Box Shop's expenditure budget and total billable hours have been determined, the recharge operation rate can be calculated.

 

If the Box Shop recharge operation built specialty boxes, it would bill its customers based on the number of hours it took to build the box. The labor rate would be $27.62 per hour.

 
  Total Expenditure budget for 200x
$84.100
 
  Total billable hours for department   3045 = $27.62/hour
  
 
If the Box Shop recharge operation built standardized boxes, the sales price of a box would be based on the estimated number of boxes it would produce for the year. Assuming production of 5000 boxes in 200x, the sales price on each box would be $16.82.
             
  Total Expenditure budget for 200x
$84.100
 
  Estimated box production for 200x
5000 boxes
=
$16.82/hour

 

 


E-mail comments about this site