ACT Charge-out Systems
Once you have the components to collect usage statistics (resource measurement systems), compute processing costs (cost accounting systems), and identify and account for the transactions processed (transaction logging facilities), you are ready to consider the charge-out process.
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This section assumes that standard fees are derived by adding the data center's cost ("cost" defined as direct cost plus an overhead burden factor) and a pricing markup.
Using the processing cost developed by the cost accounting system and the number of transactions, you can determine the direct cost of production.
In the case of the Payroll Check Generation Application, if the processing cost was calculated to be $389.45 for a three-month period, and in that period of time 236,188 checks were produced, it could then be derived that the direct cost was $1.65 per 1000 checks. When a 106% overhead burden factor is added, the cost per 1000 checks increases to $3.40 ($1.65 + 1.06($1.65)). With an 18% pricing markup, the final fee per 1000 checks is $4.00 ($3.40 + 0.18($3.40)).
The result is the objective of transaction accounting: A standard fee ($4.00) applied per transaction (payroll check) for a long enough period of time to ensure accounting stability (one year).
The above example illustrates what appears to be a rather simple situation. In many cases, transaction accounting may actually be this simple to apply. However, two processing patterns, as related to transaction accounting, should be considered in great detail:
- The length of the measurement cycle that is used to arrive at the "true" processing cost
- The nonlinear costs of application systems as they relate to the volume of transactions
Length Of A Measurement Cycle
One of the inherent dangers of a period measurement approach is that a periodic measure may not collect all the resource activity that is required to derive the average usage for the event. Consider an IMS transaction (Accounts Payable Scan) that is used to analyze all of the accounts payable entries in the Accrued Accounts Payable database. Because this database will vary in size with the time of the month (larger in the beginning and smaller at the end, directly after payables processing), low, normal, and high processing levels for an event must be measured. Indeed, the resource measurement system must measure the total cycle over a period of at least one full month to establish a true cost for the Accounts Payable Scan.
Application Systems Having Nonlinear Costs
Many application systems have processing attributes that result in either increasing or decreasing costs per transaction as the transaction volume increases. Costs may decrease as an application system takes advantage of economies of scale.
Unfortunately, increases in cost are more typical. Generally, as transaction volume increases, the processing costs increase more than proportionately; in other words, on a nonlinear basis. This situation can be caused by programming architecture, including internal table handling overflow, database expansion, string manipulation, list processing, index file overflows, etc.
The net result of either the increase or the decrease is that the transaction accounting standard fee per transaction must be slightly modified. The recommended approach is to provide step level standard charges based on transaction volume ranges. Consider the case illustrated below:
COBOL compilations with the source statement as the transaction:
- 00001 - 00400
- standard charge per statement is $0.03
- 00401 - 01000
- standard charge per statement is $0.05
- 01001 - 50000
- standard charge per statement is $0.10
The step level standard charges have a great similarity to pricing techniques seen in many other facets of business. Consider the similarity to the photocopying business when examining a typical price schedule for a photocopier.
Each copy is one transaction.
- 01 - 010
- Standard charge per copy is $0.10
- 011 - 100
- Standard charge per copy is $0.05
- 101 - 300
- Standard charge per copy is $0.025
- 301 - 400
- Standard charge per copy is $0.02
- 401 - 999
- Standard charge per copy is $0.01
Options include collating @ $0.25 per hundred copies and three-hole punch @ $0.30 per hundred copies.
Notice that in the copier price schedule there is a basic cost for handling the transaction (that is, copy) and additional standard charges for options.
The example below applies to COBOL compilations that use the source statement as the transaction. Source listings and cross-reference listings are options that increase the cost of a compilation. Thus, it is advantageous to have option pricing for compilations. The following table illustrates a potential set of charges:
Source Basic Cost Statements per Statement 1 - 400 $0.03 401 - 1000 $0.05 1001 - 5000 $0.10 Additional charges per option: SOURCE XREF DMAP PMAP $0.005 $0.020 $0.005 $0.015
If a program was compiled that had 300 source statements and requested a SOURCE listing and cross-reference list (XREF), the total charge would be $16.50 ($9.00 base charge and $7.50 for the two options).
The benefit of this approach is that the charges are now directly associated with the selected options. You can estimate the cost before execution.