Cost and Reasonable Rental Value
I. Purposes of the Brief
This brief amicus curiae does not address the merits of the predatory pricing allegation against BuyGasCo Corporation ("BuyGasCo"). It speaks only to the nature of the cost accounting system that we, as students of accounting, think to be appropriate for addressing the issues presented by cases of this general type.
We offer our views on this subject out of concern about the allocation of indirect costs used in assessing the appropriate gasoline cost value in State of Florida v. BuyGasCo Corporation, 2003-05143 (D. FL. 2003). We regard the allocation system employed in that opinion to be inconsistent with systems in common practice. Use of that system has a potential adverse effect on both the motor fuel retailing industry and the motor fuel market. It should not be employed in judging the issues in the Florida v. BuyGasCo dispute.
This brief aims to aid the court in constructing a more appropriate framework for resolving the indirect cost allocation issues presented by the case. Before proceeding with a discussion of this framework, it may be helpful to the court to know that we agree with the view expressed in the initial decision: that BuyGasCo 's cost for regular grade gasoline exceeded their price. We understand that the court is currently considering BuyGasCo 's motion for appeal and that the motion relies heavily on the cost accounting system developed by Dr. J. T. Humboldt. Although we agree with the accuracy and fundamentals of Activity-Based Costing systems such as Dr Humboldt 's, we disagree with his allocation methodology and calculations. II. Background The Florida Motor Fuel Marketing Practices Act (MFMPA) determines motor fuel cost for non-refiners as the actual invoice price, including associated freight charges and taxes, plus direct labor and reasonable rental value of the outlet attributable to fuel sales. The invoice price by its nature can be directly attributable to each grade of gasoline at a per
This brief amicus curiae does not address the merits of the predatory pricing allegation against BuyGasCo Corporation ("BuyGasCo"). It speaks only to the nature of the cost accounting system that we, as students of accounting, think to be appropriate for addressing the issues presented by cases of this general type.
We offer our views on this subject out of concern about the allocation of indirect costs used in assessing the appropriate gasoline cost value in State of Florida v. BuyGasCo Corporation, 2003-05143 (D. FL. 2003). We regard the allocation system employed in that opinion to be inconsistent with systems in common practice. Use of that system has a potential adverse effect on both the motor fuel retailing industry and the motor fuel market. It should not be employed in judging the issues in the Florida v. BuyGasCo dispute.
This brief aims to aid the court in constructing a more appropriate framework for resolving the indirect cost allocation issues presented by the case. Before proceeding with a discussion of this framework, it may be helpful to the court to know that we agree with the view expressed in the initial decision: that BuyGasCo 's cost for regular grade gasoline exceeded their price. We understand that the court is currently considering BuyGasCo 's motion for appeal and that the motion relies heavily on the cost accounting system developed by Dr. J. T. Humboldt. Although we agree with the accuracy and fundamentals of Activity-Based Costing systems such as Dr Humboldt 's, we disagree with his allocation methodology and calculations. II. Background The Florida Motor Fuel Marketing Practices Act (MFMPA) determines motor fuel cost for non-refiners as the actual invoice price, including associated freight charges and taxes, plus direct labor and reasonable rental value of the outlet attributable to fuel sales. The invoice price by its nature can be directly attributable to each grade of gasoline at a per