Material support division, working capital fund - Air Force Link

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7–10 AFMAN 23-110 Volume 1 Part 3, Chapter 7 7.7.3.4. BOCR. BOCR@LAC/LRC is the portion of the cost recovery element that represents indirect and direct overhead costs. 7.7.3.4.1. Examples are various Supply Operations Costs, Defense Logistic Service Center (DLSC), DLA Transaction Service Center, Defense Reutilization and Marketing Service (DRMS), Defense Information Systems Agency (DISA), Defense Finance and Accounting Service (DFAS), Material Inflation, Accumulated Operating Results (AOR), DLA distribution issue/receipts costs, and transportation costs. 7.7.3.4.2. The BOCR factor is determined by dividing the total BOCR expenses for a FY by the total expected sales at LAC and LRC. The BOCR factor is applied as a flat surcharge factor, to the LAC and the LRC, across all NSNs. The D200N computes the BOCR by multiplying the LRC and LAC times the BOCR factor to obtain the BOCR costs. 7.7.3.5. Carcass Cost. The value of an asset when the LRC and the BOCR have been removed from the Standard Price of the item. (NOTE: Also equates to LAC minus LRC). 7.7.3.6. MCR. The portion of each Exchange Price sale that will pay for the delivery of new items purchased to support the customer (buy deliveries program). The MCR represents the total constrained Budget Year buy requirement minus the expected sales at LAC (the constraint being that it cannot be more than what the customer is funded). The MCR factor is calculated by dividing the total constrained Budget Year buy requirement minus the expected sales at LAC by the expected sales at LRC. The MCR factor is applied as a flat surcharge factor across all reparable NSNs. The D200N computes the MCR by multiplying the LRC times the adjusted MCR factor to obtain the MCR costs. 7.7.4. Cost Elements. The following elements are based on prior history and future projections of budget data from the Surcharge (cost) Calculation worksheet (SM 5A): 7.7.4.1. Supply Operations Costs include Payroll, Service Contracts, Sustaining Engineering/ Unit Under Test, Real Property Maintenance, Depreciation and other Base Operating Services. 7.7.4.2. Distribution Depot Costs including line item receipts, issues and storage. 7.7.4.3. DLSC, DLA Transaction Service Center, DRMS, DISA and DFAS costs. 7.7.4.4. Transportation Costs, including first and second destination transportation costs. 7.7.4.5. Process improvement investment costs (e.g., Lean Logistics, Materiel Support Division, etc.). 7.7.4.6. The Loss/Damage/Spoilage Costs, including wholesale and retail. 7.7.4.7. Accumulated Operating Result Adjustment. The AOR is a balancing element to make up for all actual/projected losses or to give back actual/projected gains in a subsequent year. The AOR can be negative or positive. 7.7.4.8. Cash Adjustment Costs. A surcharge element included in the business operations surcharge to allow MSD the ability to build cash if necessary to ensure the WCF maintains the 7-10 day cash-on-hand requirement set by law. 7.7.5. MSD Process Flow: 7.7.5.1. Customers: 7.7.5.1.1. “Standard” Price customer:
AFMAN 23-110 Volume 1 Part 3, Chapter 7 7.7.5.1.1.1. Deals with MSD solely on the basis of Standard Price transactions. 7.7.5.1.1.2. Generally those customers that deal directly with the AFMC wholesale supply system bypassing the Standard Base Supply System (SBSS), such as Foreign Military Sales and other DOD and government agencies. 7.7.5.1.2. “Exchange” Price customer: 7.7.5.1.2.1. Deals with the MSD on the basis of Exchange Price transactions, but under certain unique circumstances may engage in Standard Price transactions. 7.7.5.1.2.2. To be an Exchange Price customer, the customer and the MSD must have: (1) an exchange agreement, and (2) a mechanism to track the exchange transactions. 7.7.5.1.2.3. Generally, all SBSS users are authorized “Exchange” Price customers, as are the organic depot maintenance activities because they have Due In From Maintenance (DIFM) tracking systems in place. 7.7.5.2. Process Flow. 7.7.5.2.1. The Standard Price is what all customers see in the stock list. It is the price “Standard” Price customers pay for all issues and “Exchange” Price customers pay for an initial issue of an MSD asset or if they do not close a DIFM detail within sixty days. Standard Price=LAC + BOCR@LAC 7.7.5.2.2. “Standard” Price customers will be charged the Standard Price for all serviceable materiel issued and the UAP for all unserviceable materiel issued. This policy is based on the presumption that, in the absence of an exchange agreement and exchange tracking system, each transaction with a “Standard” Price customer is a one-time transaction and that the fund will have to replenish the asset sold. If a “standard” price customer returns a serviceable asset, the credit granted will be determined based on the asset needs of the SMAG. Credit return policy is fully explained in paragraph 7.9.. 7.7.5.2.3. The Exchange Price includes the cost to repair the asset and the overhead cost (surcharge) to maintain the reparable logistics pipeline. When an “Exchange” Price customer requests a reparable, the DIFM cycle is initiated, and the customer is charged the Exchange Price. Exchange Price=LRC + BOCR@LRC + MCR 7.7.5.2.4. If the “Exchange” Price customer can repair the broken asset within sixty days, they are credited (paid) the Exchange Price for the repair. However, if they return an unserviceable asset within sixty days, the customer gets zero credit. 7.7.5.2.5. If the “Exchange” Price customer does not return the asset either serviceable or unserviceable within sixty days, then MUP is added to the Exchange Price. This brings the cost to the customer up to the Standard Price. The logic is that, if a customer does not return either a serviceable or an unserviceable asset, then MSD will charge the full cost (Standard Price) to replace the asset. The “Exchange” Price customer can still turn in an asset after sixty days and recover their cost based on the supply condition code on turn-in transaction. 7.7.5.3. Repair of MSD assets at other than the depot will be according to applicable Air Force technical orders. If the customer cannot repair the asset according to applicable Air Force techni- 7–11
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Material support division, working capital fund - Air Force Link

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