BOP Program Statement 8510.03 § 2

are:

a. Costing procedures will be standardized to ensure

consistency throughout the Corporation.

b. Duties and responsibilities for the Business Manager and

Factory Manager as they relate to cost analysis will be defined.

c. The accuracy of internal and external financial reporting

will be accomplished.

d. Quarterly review and analysis of application rates and

annual submission to the Financial Management Branch (FMB) will

be completed.

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3. DIRECTIVES AFFECTED

a. Directive Rescinded

PS 8510.01 Factory Costing Procedures (11/27/97)

b. Directive Referenced

PS 1240.05 Records and Information Management Programs

(9/21/00)

4. STANDARDS REFERENCED

a. American Correctional Association 3 Edition Standards forrd

Adult Correctional Institutions: 3-4406

b. American Correctional Association 3 Edition Standards forrd

Adult Local Detention Facilities: 3-ALDF-5A-17

5. DEFINITIONS

a. Work Center. Work Centers are specific functions or

machines within a production plant. Consideration must be given

to the level of control management wishes to establish over the

production process when establishing work centers for a

particular factory.

b. Cost Center. The unit of activity for which costs are

accumulated. Cost centers may encompass one or more work centers

and are established for cost control or product costing purposes

at the level management determines to be justifiable (cost vs.

benefit). Accumulated expenses for each cost center are reported

on the Cost Center Report.

c. Activity Costs. Those costs that are not easily identified

with a specific product or service.

— They are classified as either Production (Variable)

activity or Support (Fixed) activity.

(1) Production Activity. Those costs incurred as a direct

result of a production operation and can be easily identified to

a department's production activities.

— They include costs associated with keeping

production lines operating, such as foremen and

inmate wages, supplies, and indirect material.

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(2) Support Activity. Those costs resulting from

activities performed in support departments. These costs are not

clearly identified to a production operation. Support

departments include:

— Quality Assurance,

— Business Office,

— AW/SOI,

— Purchasing,

— Warehouse,

— System Administration,

— Recycling,

— Maintenance, and

— Factory Administrative Expenses.