By William B. Rice
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Extra info for Gases
Also, government civilian worker regulations tend to make labor costs hard to quickly reduce. Indeed, analysis by Wallace, Kem, and Nelson (1999) suggested that 80 percent of working capital fund costs are fixed with respect to the amount of depotlevel reparable sales. Our multisystem data analysis found a variety of relationship patterns between flying hours and organic DMAG expenditures, some in the intuitive positive direction but others in the counterintuitive negative direction. These patterns are not consistent across aircraft.
We again undertook full (current month and 12 monthly lags) and stepwise regression. We also estimated a “flying hour sum” regression in which only a constant term and the sum of the current and 12 monthly lags of flying hours are independent variables. 13 suggested this additional estimation to assuage concerns about highly colinear independent variables. 14 presents the three types of results for cargo/tanker MDs (C-130, C-135, C-141, and C-5). The FH coefficient sum is the sum of the 13 flying hour coefficient estimates.
But if the empirical results presented here hold up to additional investigation, this budgeting analysis raises questions about WCF pricing as well. The literature on optimal internal transfer prices is clear that prices should reflect the decisions they are designed to inform. If they inform investment decisions, they should reflect all future costs of investment; if they inform the ongoing use of existing assets, they should reflect only marginal costs associated with marginal use of these assets.