RCA Open Source Application: ROSA Manual/Demonstration of the Base Model/Step 2/Update Rates

 Table of Contents   edit

• Introduction
• Limitations of ROSA
• RCA Modeling
  • Cost Objects in an RCA Model
  • Planning Outputs and Primary Costs
  • Relationships in an RCA Model
  • Storyboard of the Get Well Manufacturing Model
• Demonstration of the Base Model
  • Step 1: Discover RCA
    • Analyze Rates
    • Analyze Resource Pools
    • Analyze Product Cost
  • Step 2: Play with the RCA Model
    • Maintain Resource Pools
    • Maintain Products
    • Maintain Primary Cost
    • Maintain Consumptions
    • Maintain Capacity
    • Update Rates
• Unit 5 - Populating Your Own RCA Database
  • Step 3: Build an RCA Model
    • Import Master Data and Values
    • Importing of Resource Pool & Business Process Master Data from a source file
    • Importing of Product Master Data from a source file
    • Importing of Primary Costs & Consumption Quantities from a source file
    • Importing of Capacity Quantities from a source file
    • Final Step
• Appendix A. Palo Installation Guide

DEMONSTRATION OF THE BASE MODEL

Step 2: Play with the RCA Model - Calculate Rates

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The Calculate Rates template shown in Figure 31 (see below), will show the rate calculation for every Resource Pool and Business Process after every change made to the planning data (e.g., primary costs, internal consumption quantities, or capacity). A very important feature of this Calculate Rates screen is that it must be refreshed to ensure data accuracy by clicking on the “Calculate” button after any change has been completed on all the other Templates. No changes should be made on the Calculate Rates sheet itself.

Rates are calculated, stored and utilized by individual period. This means that the rate cannot be calculated for the entire year but must be calculated separately for each month. Therefore, the rate calculation must be run twelve times to complete the rate calculation for any single year. Once the Calculate button is depressed, the following will occur in the table automatically. (Note: No manual input should be made on this table.) The results of the rates calculation screen can be viewed in an expanded view of the Calculate Rates report shown in Figure 31.

For the inquisitive user only: As the calculations are done programmatically, they are generally transparent to the user. However, understanding this table provides insight into the calculations and a comprehensive view of the full model.

Each column title is representative of Palo dimension elements and may not necessarily be clear to the user. An explanation of all the columns is as follows:

• Columns B & C

The model builds all the Provider-Consumer relationships in the first two columns of the model as per the planned internal consumption allocations the cost model designer defines. Note: For importing steps of internal (secondary) consumption, quantities refer to Unit 5.

Notice in the table’s second row located below the column heading, the very first relationship is displayed from left to right. For example, Resource Pool 6102 consumes quantities from Resource Pool 6101. Said another way, Resource Pool 6101 charges Resource Pool 6102 for the services Resource Pool 6101 has provided. Every row in the table represents such a Provider-Consumer relationship in the model.

The first row, with the darker fill color, is the summarization row for the group of relationships representing one Provider resource pool. It is on this row where values and quantities are summarized and rates calculated. Note the summarization rows for all the other resource pools and business processes.

Figure 31 - Calculate Rates template

• Columns D to G

The table retrieves this information from the Palo data cube and is described as follows:

Columns D shows the total output quantity sent from the providing Resource Pool. In the summary row, this amount equals the consumption by consuming Resource Pools in columns E and F.

Columns E & F show the quantities consumed by the consuming Resource Pools. The quantity will be in either E (fixed quantity) or F (proportional quantity) depending on the nature of the consumption relationship. For Resource Pool 6101, which provides electricity, the consuming Resource Pools consume the electric utility in a proportional relationship manner.

Column G shows the total capacity of the providing Resource Pool. The table retrieves this information from the Palo data cube, which reflects the model designer has imported data.

• Columns H to L

These columns display the various categories of cost.

Column H is the Primary Fixed cost. The value is retrieved from the Palo data cube, where the model builder would have loaded it. This reflects the fixed costs inherent in the providing resource pool.

Column I is the Secondary Fixed cost. Secondary fixed cost represents fixed costs from supporting resource pools. The value is calculated by multiplying fixed quantity by total rate. For Example: 6102 sends a fixed quantity of 167 to 6101 on the 9th row of the report. 167 times $1.636 = $272.70 (allow for rounding errors) In the summarized rows only, Primary Fixed cost and any Secondary Fixed costs from any other providing Resource Pools are added together. (Example: For summary line 6101 it is --- $1131.034 (column I) = $858.333(column H) + $272.701 (fixed cost sent from 6102 to 6101).

Column J is Secondary Fixed cost – proportionally consumed. This column shows that proportional support has a fixed cost component. The value is calculated by multiplying proportional quantity by total fixed rate. In the summarized rows, the amount in this column represents the sum all these costs for the summarized providing resource pool. Example: Resource Pool 6401 is the only resource pool that supports 6101 with proportional quantities. In the 6th line from the bottom of the chart, a proportional quantity of 41 is multiplied by the total fixed rate of 8.362 = $342.663 (with rounding errors). This is the amount on the 6101 summary line since no other proportional support is provided to RP 6101. Note: Column J seems to be an odd element. The reason is that when quantities are consumed in a proportional manner, the associated cost has a fixed element coming from the rate of the provider. This cost element is one of the factors distinguishing RCA from other cost accounting methods and it provides for a more accurate calculation of the fixed and proportional elements of the total rate.

Column K is the Primary Proportional cost. The value is retrieved from the Palo data cube and would have been input from the model builder. It shows the Proportional costs inherent in the resource pool.

Column L is the Secondary Proportional cost. The value is calculated by multiplying proportional quantity by the proportional rate. In the summarized row, the Primary and any Secondary Proportional costs that support the providing Resource pool are added together. Example: RP 6101 has secondary proportional costs from the support it receives from RP 6401 (6th row from the bottom). Column L = 41 x $22.478 = $921.156. The secondary proportional costs for RP 6401 are summarized in the row above and the Primary proportional costs are added to this figure. This combined figure of $21,114.126 is the numerator for the proportional rate calculation in column Q.

• Columns M to Q

These columns display the different elements of the rate. Rates are calculated using the elements already discussed and then stored in the Palo data cube. It may be useful to look at the examples at the end of this section as you review these definitions.

Column M is the Total Rate. It is the sum of the three individual rate elements in columns O, P and Q. Total rate is used to calculate the cost of Secondary fixed consumed quantities.

Column N is the Total Fixed Rate. It is the sum of the two fixed rate elements in column O and P. Total Fixed rate is used to calculate the Secondary proportionally consumed quantity’s fixed cost element. It is also used to calculate Fixed Recovery. Recovery is the cost charged or passed on to the consumer.

Column O represents Fixed Cost/Capacity. The formula is Fixed cost (excluding column J) divided by capacity (column I /G). Fixed rate (Fixed consumption fixed cost) is not used to calculate any consumed quantity but only to calculate the cost of excess/idle capacity.

Column P is the Proportional Consumption Fixed Element. The formula is Proportional Consumption Fixed Cost divided by capacity (column J/G). The rate in column P is not used on its own, but is shown separately as it is the one element of the Total fixed rate.

Column Q is the Proportional Rate. The formula is Proportional cost divided by Total Quantity (column L/D). Proportional rate is used to calculate the cost of Secondary proportional consumed quantities. It is also used to calculate Proportional Recovery.

Examples:

• The Utility Resource Pool 6101 is consuming 41 labor hours from Maintenance Resource Pool 6401 in April. It is a proportional consumption, as the amount of maintenance required will depend on the amount of electricity generated. Resource Pool 6101 will be charged $1264.44. That is 41 x the total rate of $30.84 (41 x $22.48 proportional plus 41 x $8.36 fixed).

• Production Resource Pool 7001 has a floor area of 417 square feet. The Facility Resource Pool 6102 will charge Resource Pool 7001 $681.75 (417 x $1.64 total rate) monthly. Resource pool 7001 will consume the cost in a fixed manner, as the floor area does not change. Resource Pool 6102 has only fixed costs; The total rate has therefore a fixed element but no proportional element.

• If Resource Pool 6101 does not reach its planned output level of 19,417 Kilowatt hours, and thus ended the period with spare capacity, let’s say 400 Kilowatt hours, then that spare capacity will be valued at $21.60 (400 x $0.054 Fixed rate in column O only). The value of $21.60 represents the unrecovered primary and secondary fixed costs of resource pool 6101. It obviously did not incur any proportional costs for this portion of its capacity. Excess/idle cost is fixed cost only.

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