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Spratley Technologies, Inc.
Colley, John L.; Carson, David; Peterson, Judy Case G-0254 / Published April 1, 1985 / 12 pages.
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Product Overview

This case introduces the issue of appropriate methods for setting cost-allocation or "recharge" rates for uses of the corporate aircraft in a large diversified company. The method used previously, allocating less-than-variable costs, assisted new divisions in startup, because the large fixed costs were allocated to major units through corporate overhead. A new method has been proposed to allocate all direct costs to users. The additional issue of profitability, rather than recharge rates, is introduced. The case provides a complex setting for management control of these extremely large, discretionary, capital investments. See also the B case (G-0486).

  • Overview

    This case introduces the issue of appropriate methods for setting cost-allocation or "recharge" rates for uses of the corporate aircraft in a large diversified company. The method used previously, allocating less-than-variable costs, assisted new divisions in startup, because the large fixed costs were allocated to major units through corporate overhead. A new method has been proposed to allocate all direct costs to users. The additional issue of profitability, rather than recharge rates, is introduced. The case provides a complex setting for management control of these extremely large, discretionary, capital investments. See also the B case (G-0486).

  • Learning Objectives