Phil Kane wrote:

>>The media always seems to leave that part out of their shock reports.
>>    
>>
>  And the scoffers fail to remember (or understand) that the "$500+
>  hammer" came about by allocation of contract overhead by line item
>  rather than by proportional item cost....
>
>  Follow the bouncing ball for a machine and a hammer needed to
>  maintain it:
>
>  Machine catalog cost   = $ 10,000.00
>  Hammer catalog cost    = $     10.00
>  Total cost of material = $ 10,010.00
>  10% Contract overhead  = $  1,001.00
>  Total contract cost    = $ 11,011.00
>
>  By Proportional Item Cost allocation method, overhead is allocated
>  proportionally:
>
>  Machine cost = $ 10,000 + 10%  = $ 11.000
>  Hammer cost =  $     10 + 10%  =       11
>  Total cost  =                    $ 11,011
>
>  By Line Item allocation method, the total overhead is divided by the
>  number of line items, in this case 2:
>
>  Machine cost = $ 10,000 + $ 500.50 = $ 10,500.50
>  Hammer cost  = $     10 + $ 500.50 = $    510.50
>  Total cost   =                       $ 11,011.00
>
>  Note the "$ 500+ hammer" in the example above !!
>
>  Same hammer, same contract cost, no extra charge for the asinine
>  comments by The Congress and The Press and The Critics.
>  
>

Hi Phil,
Thanks for that insight into different ways of looking at the way 
accounting is [maybe] done. :-)

-- 
Regards,
Mike

Failed the exam for
--------------------
MCSE - Minesweeper Consultant and Solitaire Expert
--------------------
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