|
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
|