New Zealand Gazette – 1971 – No. 3

Page 71

✨ Price Justification Scheme Guidance



  1. The details supplied of the calculation of items at each
    point of time should reveal the reason for the differences
    in costs and revenue over the period—but where such differ-
    ences are appreciable applicants should ensure that the causes
    of them are adequately explained.
  2. The following notes relate to specific items and cover the
    substantiating particulars which it is desired should be
    furnished on a separate sheet.
    Sales
  3. The sales figures sought under items (i) and (ii) (Part II)
    should be shown as gross values before the deduction of
    discounts—which are to be separately disclosed under item
    (XVII).
    Materials and Packaging Materials
  4. The basis of calculation of this cost is to be shown with
    supporting calculations for each of the two points of time.
    Where an increase in the cost over the period is due to
    a rise in the price of the materials themselves the date when
    such rise took place should be indicated—together with
    particulars of the allowance which has been made for the
    clearance of the old, lower-costing stocks. Where the increase
    in cost has been occasioned by a change in the type of
    packages, or packaging materials used, explanatory details
    should be supplied.
    Wages, Salaries, and Other Remuneration
  5. In entering this item on the form please provide separate
    figures for the various classes of staff—(as set out in sub-items
    (a) to (d) item VIII Part II) and ensure that in each instance
    all types of remuneration are taken into account—i.e., pay-
    ments at ordinary time, payments at overtime rates, holiday
    pay, bonuses, travelling allowances, etc.
    Substantiating details should provide a breakdown under
    these headings for payments made to your various classes of
    staff—and particulars of calculations should be furnished to
    indicate how the amounts in question have been arrived at
    either by projection from the amount paid in the previous
    financial year—or by taking a typical shorter period, say the
    2 weeks prior to the time points in question, grossed up to
    an annual basis.
    If a portion of the increase in this item is attributable to
    increase in rates of remuneration which first became payable
    from a date subsequent to 31 December 1970, please indicate
    the relevant date, and furnish additional details under the
    headings already mentioned of the annual level of wage and
    salary remuneration payable as at 31 December 1970.
    Repairs and Maintenance
  6. Substantiating details for the amount shown under this
    heading at each time point (i.e., base date and the date of
    the pricing submission) should reveal the reasons for any
    significant increase which may have taken place. If the current
    calculation incorporates items (e.g., the painting of a building)
    which would normally recur at intervals of 2 or more years
    please supply particulars and indicate a suitable spread of
    such charges so that the present period is not saddled with
    more than its appropriate share.
    Depreciation
  7. Please provide a subdivision of this item of cost at both
    relevant dates under the headings of:
    (a) depreciation at standard income tax rates;
    (b) special depreciation;
    (c) depreciation provided for in excess of (a) and (b).
    Power
  8. Particulars furnished in support of this item should
    provide a breakdown of expenditure incurred on the various
    classes of power—electric, gas, oil, coal, etc. Where any
    increase in cost has been occasioned by a change in the type
    of power used the reason for this should be explained.
    Rent
  9. Please indicate the name of the owner of the property,
    and if such owner is a subsidiary or associated company of
    the applicant, show the basis on which the rental has been
    calculated. Details should be given of any change in rental
    which took place between the relevant dates—that is the base
    date and the date of this submission.
    Interest
  10. A detailed breakdown of this charge should be furnished
    showing the sources of the loan funds and the rates of interest
    in each case. By way of comparison interest payments made
    during the financial year prior to the base date, and prior to
    the lodging of the current submission should be supplied.
    Administration and General Expenses
  11. An indication should be given of the main items
    incorporated under this heading, which should include all
    expenses (other than distribution expenses) not otherwise
    included.
    Outward Freights
  12. Substantiating details of the calculation of this item
    at the two relevant points of time should include particulars
    of any general increases in freight charges which have taken
    place over the period.
    Discounts
  13. This item should be related to the value of sales as
    calculated at each of the two time points. Cash and quantity
    discounts should be separately shown.
    Other Selling and Distribution Expenses
  14. In addition to indicating bases of calculation please
    itemise under appropriate headings.
    Payroll Tax
  15. Details of calculation supplied for this item should
    indicate that it represents only the actual tax payable on the
    amounts enumerated under item (viii) after taking into account
    such exemptions as are allowable, but excluding export
    incentives.

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🏭 Price Justification Scheme: Guidance on Cost Substantiation (continued from previous page)

🏭 Trade, Customs & Industry
Price justification, Cost substantiation, Sales, Materials, Wages, Depreciation, Power, Rent, Interest, Expenses, Freights, Discounts, Payroll Tax