Guide to Calculating Ownership and Operating Costs of Department of Transportation Vehicles and Equipment: An Accounting Perspective (2020) / Chapter Skim
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19 4. EXAMPLES OF ESTIMATING FLEET COSTS USING ABC METHOD Of the eight steps for fleet cost accounting outlined in the chapter above, Step 5a-5d (Apply ABC Approach)
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20 Direct or Indirect Detailed Cost Division that Pays Costs ($ per year) Indirecta Accounting support Accounting Division $4,000,000 Pension/401k contributions Maintenance Division $2,000,000 Janitorial services Support Services $1,000,000 Office supplies Human Resources $1,000,000 Refuse services Support Services $500,000 Software Information Technology $400,000 Training Support Services $500,000 Uniforms Support Services $600,000 Utilities (gas, water, electric, other)
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21 Direct Cost Activity Costsa ($ per year) Subtotals by Activity Maintenance and repair provision subtotal $5,000,000 Parts acquisition Parts provision $1,000,000 Tires Parts provision $500,000 Parts provision subtotal $1,500,000 Grand total $30,050,000 a This table reflects the same costs as shown above in Table 3.
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22 4.4. Allocate Costs into Activities Step 5c is likely the most time consuming of ABC: performing the indirect cost allocation using the cost drivers.
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23 Table 6. Example of allocating indirect costs associated with accounting support to fleet activities Position Available Time Salary Base Equipment Provision Maintenance and Repair Provision Fuel Provision Parts Provision Non-Fleet Activities Summed Fleet Activities % Time Cost % Time Cost % Time Cost % Time Cost % Time Cost % Time Cost Office Assistant III 100% $60,000 15% $9,000 15% $9,000 0% $0 0% $0 70% $42,000 30% $18,000 Accountant 100% $80,000 10% $8,000 15% $12,000 20% $16,000 0% $0 55% $44,000 45% $36,000 Controller 100% $120,000 4% $4,800 2% $2,400 2% $2,400 3% $3,600 89% $106,800 11% $13,200 Parts Act.
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24 Once all indirect costs are allocated in a similar fashion according to their cost drivers, they can be summed with the direct costs to estimate the total cost of each fleet activity. This is shown in Table 8.
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25 allocated the same cost)
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26 4.5.3. Parts Provision As shown in Table 8, the direct costs of the hypothetical fleet are $1,500,000 and the indirect costs are $100,000.
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27 to purchase is installed on a truck, the equipment unit price to the fleet for that part would be $106.67 (direct parts cost + 6.67% markup)
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