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<br /> ZlC <br /> c. The basis must conform to generally accepted allocation <br /> and unit cost standarëIs. <br /> d. The basis must be consistently applied. <br /> The results of this segment of our engagement are input as <br /> allocation units within the software programs and also contribute <br /> to the development of the user fee narratives. <br /> C. Incorporate the Full Cost Citywide Cost Allocation Plan. The <br /> ~~ purpose of this task is to increase the allocations of unallocated <br /> t <br /> , <br /> ! and central servIce dollars to City agencIes to support <br /> \ determinations of costs for fees and user charges. <br /> When comparing the cost of providing a service with the revenue <br /> . received from the fees, the costs need to include not only the <br /> . . expenditures contained In a department I s budget, but the <br /> department's share of central servIce costs (e.g., payroll, <br /> purchasing, data processing, janitorial, etc.). The" full cost" <br /> citywide cost allocation plan that DMG is preparing for the City <br /> under its current contract identifies each department's share of <br /> central service costs. These central service costs (indirect costs) <br /> will be added to the department's costs (direct costs) when <br /> ~ <br /> analyzing the cost of each service area or activity. <br /> D. Select Most Appropriate Costing Approach. Depending on the <br /> availability of data, type of service and needs of the City, DMG <br /> utilizes either the Cost Pool Method (i.e., top down approach) or <br /> the Unit Cost Method (i.e., bottom up approach) of costing. <br /> Both methods are further explained below. <br /> I Cost Pool Method - "Top Down Approach" - This costing <br /> method identifies comparable revenue and cost pools within a <br /> department. The cost pool is taken down to the lowest level at <br /> which valid cost and/or revenue data are available. An example <br /> would be Building Permits where cost, revenue, and number of <br /> permits can be identified at the "total" Building Permit level; <br /> whereas, it may not be possible to identify the cost, revenue and <br /> number of permits for a Building Permit for Storage Facilities <br /> with an area between 2,001 and 5,000 square feet. Thus, <br /> although the cost to issue a particular permit is not identified, the <br /> direct cost of the total service is known. When the other costs <br /> are added to the direct costs, the full cost of the service is <br /> identified. This full cost can then be compared with the revenue <br /> generated with any necessary fee increases identified. To <br /> develop a unit cost figure, the full cost of the service is then <br /> divided by the total number of service units. <br /> ..- <br />