MA.1:5.1 - A test order below reported average cost
A test service considers an order for 100 accepted units at 12 currency units each. Its standard report assigns an average cost of 15 per unit. The manager first needs the resource model; the comparison follows from it. The following is a constructed case with supplied operating and contractual facts.
The resource owner supplies an adequate schedule, qualification and reserve account. There are 20 uncommitted usable rig-hours in the required window. Exactly one additional contiguous ten-hour block can be obtained for 240, subject to booking. Setup requires six to nine rig-hours, followed by 0.2 rig-hours per processed unit. One successful attempt per accepted unit is assumed.
The work requires 14 qualified staff-hours; 16 usable hours are already available and pay is unchanged. Materials for this order must be bought now at 2 per unit. A supplier charges 1 per processed unit.
| Recovered dependency | Quantity or amount | What the receiving comparison can use |
|---|---|---|
| Setup plus processing occupies the rig. | 6–9 + 100 × 0.2 = 26–29 rig-hours. | The supplied 20 hours are insufficient; one extra ten-hour block makes the supplied arrangement adequate. |
| Qualified staff support the work. | 14 staff-hours within the supplied 16. | The option uses capability, with no additional wage payment under these terms. |
| Materials are consumed and purchased for the order. | 100 × 2 = 200. | A payment of 200 now. |
| The supplier charges per processing attempt. | 100 × 1 = 100. | A payment of 100 under the one-attempt premise. |
| Extra rig capacity is sold as one block. | 240 for the ten-hour block. | A payment of 240, although the extra occupation is only six to nine hours. |
| The existing report assigns average cost. | 100 × 15 = 1,500. | A reported amount whose assignment basis remains available for its own use. |
The model supplies 540 in additional payments. OPS.14 compares the 1,200 receipt with those payments: the difference is 660, over a horizon that includes both, with all other flows unchanged and no displaced contribution. The reported 1,500 does not establish this incremental amount.
Payment time changes what is feasible. Without the order, unrestricted cash available for these payments would remain 500 through day 28 after all other receipts and obligations. Materials and the block require 440 now, leaving 60. The supplier’s 100 is due on day 7; the customer pays on day 28. There is therefore a 40 funding gap on day 7. The operating or finance decision must resolve that gap before treating the option as funded.
If an additional receipt of 50, unchanged between accepting and declining the order, instead arrives before day 7, cash after both payments is 10. The order’s incremental difference remains 660. The unchanged receipt cancels from that difference but changes the whole cash position used to establish payment feasibility.
The setup interval is sufficient for the one-block question: 26–29 hours always lies within the supplied 30. A new product requiring an eleven-hour setup would require 31 hours. That case reopens feasibility and the resource model; the earlier result cannot be extended by merely changing the sales quantity. Failed attempts, different staff qualifications or changed supplier terms likewise require attention where they affect the dependencies.