No, there aren’t. Read David Simmons’ post. The items are ALL marked up by a percentage of the company’s overhead. Thus a $50 dollar toilet seat and a $50 hammer and a $500,000 jet engine all get a surcharge of a certain amount tagged onto them.
Apparantly, that is not the case, as they do in fact seem to work in space.
I quite understand that all items get an allocation of overhead. I suggest you read my post preceeding the one you responded to.
If someone is expecting a certain type of allocation, say proportional to acquisition cost, then low-priced items (toilet seat, hammer) have too high an allocation (according to what they’re expecting), and expensive items will seem to be too low. Of course, no one notices the costs that seem too low.
This is rarely an issue because, again, no one outside a company is interested in how costs are allocated. Do you ask Best Buy how they allocate their store air conditioning costs between DVD players and dishwashers? No, you just want the price (and you want them to stop blathering about their additional warranties).
I don’t know why the government would want overhead breakdowns, anyway, especially if a simplistic accounting is used. Maybe they don’t anymore. I haven’t heard any hammer or toilet seat stories recently.
I’m still not quite sure exactly what you mean here.
If you mean that the public would expect a proportional markup on items and thus a toilet seat’s markup should be less than the markup on a jet engine, and thus when the markup is actually a flat price on all items it makes the toilet seat seem absurd and the jet engine not so much, then I get your point. I suppose it all hinges on what Chronos meant by “listed at less than their proper value.”
I took that to mean that if a toilet seat which normally costs $50 is listed for $600, then another item (or a combination of items) should be listed at a discount of $550 to make up for it, which (as far as I can tell, I’m not a military contractor or anything…), isn’t true.
This is an oversimplification, and bids don’t quite happen this way, but it’s close enough for SDMB work:
What happens is the gov’t asks for bids for remodling a submarine. They send out bid packages that detail the work to be done. Contractors bid on the work. Lets say that the winning bid is for $11,000,000.
The government accepts that bid, but they want a full accounting of where that money went.
Let’s also say that of the $11MM, $6 million were for parts the contractor has to buy, the other $5 million for design work, transporting and tracking parts, warehousing parts outside the dock, rent, administration, supervision, phones, and hopefully profit.
Let’s also say that 10,000 parts are ordered. So, the government may want a cost per part (including overhead), and they expect the sum of the parts to equal that $11,000,000.
The easiest thing for the company to do is to divide the overhead by the number of parts. $5MM/10,000 = $500/part. So a $20 toilet seat is now $520. A $3,000,000 reactor core is now $3,000,500. The overhead for the toilet seat seems horribly high and the reactor a bargain.
Obviously, the toilet seat didn’t need nearly as much work to secure, design around, transport, or warehouse than the reactor. The company could do some accounting summersaults to get numbers that seem more reasonable. But what would be the benefit? They already have won the contract for having the lowest overall price. Would it help the government? Maybe, but they’d probably rather have the company spend its time to get the job done on time than try to allocate overhead differently.
Taken out of context, the $520 toilet seat seems like a rip off. The only way to make it not “look bad” would be to require a more complex accounting scheme, which would drive up the costs of the bids. Or the gov’t could stop asking for breakdowns of costs and just look at the grand totals. But the government likes to micromanage.
The way I heard it, We spent the millions to make the space pen, and the Soviets decided to use pencils.