The Cost-Driver Analysis of Common Costs for Public Utilities Industry
Date Issued
2004
Date
2004
Author(s)
Lao, Kai-Yuan
DOI
zh-TW
Abstract
With the characteristic of “region monopoly”, Gas Utility Industry is probable to get excess profits. If it also has non-regulated operations , it may cause cross-subsidy for the improper allocation of common costs. What’s more, the separation of the Gas Equipment Installment Cost and the Gas Supplying Cost is not reasonable.
In order to solve the above problems, the government enforces a new law by adopting “Separate Accounting”, which helps to properly separate costs into the gas equipment installment cost, the gas supplying cost, and the non-regulated operation cost. However, without an exact cost driver of the common costs, the new system allows to use a reasonable method to allocate costs to related operations. And the “single-factor formulas”, which is simple but easily manipulated, is now often used in practice. Therefore, we suggest to use the “multi-factor formulas” to allocate costs.
In this research, statistic methods are used to find the proper cost drivers which lead to a multi-factor formula to allocate common costs. The results of the cost allocation in this and previous researches will be compared.
Empirical results reveal that people works in the volume-related operations, the number of total users, and the number of new users are the best cost drivers. Compared with previous results, we have two major sets of findings. First, southern gas companies have more motivation to manipulate the cost allocation in order to lower fixed costs. Second, we anticipate that if equipment installment profits are higher, the gas companies are more likely to manipulate the cost allocation. Empirical results, however, show there is no relation between installment profits and the manipulation of the companies.
Subjects
共同成本
成本動因
Cost Driver
Common Cost
Separate Accounting
Type
other