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BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of San Diego Gas & Electric Company (U 902 E) for Authority to Update Marginal Costs, Cost Allocation, and Electric Rate

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How to fill out marginal costs cost allocation

01

Identify all the direct costs associated with producing a product or providing a service.

02

Determine the activities that contribute to these costs and allocate them accordingly.

03

Calculate the indirect costs that are not directly tied to a specific activity and distribute them based on a predetermined allocation method.

04

Combine the direct and indirect costs to determine the total marginal costs for each product or service.

Who needs marginal costs cost allocation?

01

Businesses that want to accurately measure the profitability of their products or services.

02

Managers who need to make informed decisions about pricing, production levels, and resource allocation.

03

Financial analysts looking to assess the efficiency of operations and identify areas for cost reduction.

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What is marginal costs cost allocation?

Marginal costs cost allocation is the process of assigning the additional costs incurred for producing one more unit of a good or service to specific cost centers or products, allowing businesses to analyze the incremental expenses related to production decisions.

Who is required to file marginal costs cost allocation?

Entities that engage in regulated activities, particularly in industries such as utilities or transportation, are typically required to file marginal costs cost allocation documentation to demonstrate compliance with regulatory standards.

How to fill out marginal costs cost allocation?

To fill out marginal costs cost allocation, a business should identify and quantify its variable costs, assign these costs to specific products or services, and prepare a report detailing the allocations alongside justifications for the chosen method of allocation.

What is the purpose of marginal costs cost allocation?

The purpose of marginal costs cost allocation is to aid in decision-making and pricing strategies by providing a clearer picture of the additional costs associated with producing extra units, which helps in determining profitability and efficiency.

What information must be reported on marginal costs cost allocation?

Reports on marginal costs cost allocation must include the breakdown of variable costs, the methodology used for allocations, the total volume of production related to the allocated costs, and any assumptions made during the allocation process.

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