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Natural Gas > Massachusetts Formula
The following information is about Massachusetts Formula.
Massachusetts Formula Defined
A method used to allocate costs incurred by a parent company on behalf of its affiliates to those affiliates. The "Mass Formula" has three parts using the allocation factors (ratios comparing the affiliate to the company as a whole) of gross plant, gross revenues, and labor, which are added together and then divided by three to arrive at a simple average of the three factors. This formula attempts to weight various aspects of each of the affiliates so that a fair distribution of the overhead cost is allocated to each affiliate member. Compare to DISTRIGAS METHOD.
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