Cases in Cost Management 3rd Edition by John Shank

Exercise 9

Account profitability is also affected by the cost of excess capacity charged to all active households. Kim noted that if AIMS scaled back to 3,000,000 active households and planned on only a 10% excess capacity reserve (for future growth), a large proportion of cost could be eliminated. Estimate how much of total cost for 1999 could be eliminated, based on "case facts."