The Spare Parts Cost Center Concept as a Means of Improving Spare Parts Pricing: A Case Study
Abstract
Spare parts pricing by defense contractors has received considerable attention since 1983 when overpricing cases were widely publicized. Efforts to resolve the overpricing problem focused primarily on requirements determination, technical design, source of supply and cost allocation methods constrained by existing accounting structures. Other methods of improving spares prices might be identified if accounting structures could be varied. This thesis examines the accounting structures and spares pricing method for a single defense contractor to determine if establishment of a separate spare parts cost center within the cost accounting structure would improve the spares pricing process. The research determined that the spares cost center does not correct the inaccuracies in spares pricing introduced by the contractors's accounting structure. An alternative cost center structure, using functional cost centers does provide a potential means of resolving these problems.
Document Details
- Document Type
- Technical Report
- Publication Date
- Dec 01, 1985
- Accession Number
- ADA165399
Entities
People
- William R. Lavender
Organizations
- Naval Postgraduate School