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Defense Working Capital Fund Pricing Policies
Insights from the Defense Finance and Accounting Service
The Defense Finance and Accounting Service (DFAS), created in 1991 through the consolidation of military service-specific accounting and finance operations, provides a variety of services to Department of Defense (DoD) customers, such as payroll, bill payment, and generation of accounting statements. Examining DFAS data on expenditures and workload to explore possibilities for improved operations, the authors argue that current linear pricing of DFAS services is inappropriate. In particular, DFAS expenditures neither increase nor decrease commensurate with workload. DFAS's pricing could be improved by a switch to a nonlinear approach, distributing fixed costs among customers using open-the-door transfer payments and charging only incremental costs to customers on a per work unit basis. Such a pricing reform would require changes to current Defense Working Capital Fund (DWCF) regulations.
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Pages: 65
ISBN/EAN: 0-8330-2745-X
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Contents
Chapter One:
Introduction
Chapter Two:
DFAS Revenues and Costs
Chapter Three:
Analysis
Chapter Four:
Implications
Chapter Five:
Conclusions and Recommendations
Appendix A:
DFAS Cost/Workload Performance Time Trends
Appendix B:
Regression Evidence of DFAS's Cost Rigidity
Appendix C:
The Academic Literature on Nonlinear Pricing
Appendix D:
Activity Based Costing (ABC), Activity Based Budgeting (ABB), and Implications for Public Sector Organizations
Appendix E:
DFAS's Recent Experiences with the A-76 Cost Comparison Process
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