41e 



HARDWOOD RECORD 



February 10, 1917 



calculation to be made for any other condition or group of assump- 

 tions. For example, the extent to which the curves are applicable to 

 the smaller logs is questionable. On an assumption that the estimate 

 of the standing timber does not include the contents of very small 

 timber, of the smaller top logs, and of defective logs, then it would 

 be improper to levy a stumpage or carrying charge against them. 

 To compute the minimum cost at which these small logs could be 

 utilized, it might also be assumed that the fixed logging cost, consist- 

 ing mainly of the cost of sawing, could be partly or entirely disre- 

 garded, since sawing small top logs would be involved in the sawing 

 of the lower logs, and sawing butt defective logs would be involved 

 in the sawing of the upper sound 

 logs. The cost of sawing small 

 timber would necessarily be in- 

 cluded. Under such conditions, 

 the costs of production for this 

 class of logs would be materially 

 decreased over that shown in 

 curve No. 7, figure 4. Curve No. 

 8 has accordingly been plotted 

 assuming no stumpage, carrying 

 charge, or woods sawing charge, 

 and represents at least a possible 

 minimiun cost condition wherein 

 lumber might have been manu- 

 factured from these logs. It is 

 also possible that part of the 

 depreciation and original invest- 

 ment cost should be disregarded 

 on this class of logs. Although 

 curve No. 8 is carried out on a 

 theoretic basis to the 17-inch 

 diameter class for these 50 logs 

 it is improbable that the assump- 

 tions would be applicable to any 

 but the smaller logs. 



Co-operatoe's Cost Methods 



While figure 4 and Table 1 

 bring out a comparison of the 

 relative cost of production and 

 realization per M for logs of 

 different sizes, as determined 

 from the data secured in this 

 study, it is of interest to further 

 consider the data computed in 

 accordance with a method recom- 

 mended by the cooperator and in 

 use by the company. This method 

 distributes the cost according to 

 the grade of material produced. 

 Comparison of the realization 

 with the cost of production is 

 simple, since it may readily be 

 computed, but the comparison 

 with a proper distribution of the 

 cost of production to upper and 

 lower grades is more difScult. 



Many methods might be used, and it is not the intent of this article 

 to indorse any given method, but simply to illustrate by a specific 

 example. Table 2 makes a comparison of costs and realization, by 

 the cooperator 's method, the basic principle of which is that the more 

 valuable part of the product should bear the greater part of the log- 

 ging costs, viz., the commercial importance of the No. 2 common and 

 better makes it the prime product of the log and the No. 3 common 

 the by-product, and the per cent of log cost charged to cull is the 

 percentage that No. 2 common and better underruns the log scale. 

 For average sized logs this produced results in line with the compara- 

 tive selling prices of the product. The comparison by diameters in 

 this case is confined to the logs cutting 50 per cent, Doyle scale. 

 No. 2 common and better. The time of sawing by diameters given 



ill Table 2 was taken from figure 1, and is the same as for the entire 

 50 logs; the total yield was taken from curve B, figure 2; and the 

 yield in feet b. m. by diameters was computed by using the per cents 

 of each grade as given in figure 5 in conjunction with the average 

 total yield of each diameter. The cooperators' method of distributing 

 the costs is as follows: 



Distributing Costs 



(1) When the amount of No. 2 common and better overruns the 



log scale the logging cost of 1,000 feet of lumber equals the logging 



cost per M. 



Doyle scale X 



Log scale 



10 



M 



17 

 1 



II 12 13 14 15 



TOP DIAMETER - INCHES 

 2 I e » > 



BASIS - NUMBIH OF UMS 



FIG. 5.— AVERAGE YIELD PER LOG BY GRADES IN PER CENT OF 



.WERAGE NET LUMBER TALLY FOR LOGS YIELDING NOT LESS 



THAN 50%, DOYLE SCALE, No. 1 COMMON AND BETTER 



Amount No. 2 comrr.on and better 

 Under this condition the cost of 

 logging the No. 3 common is com- 

 pletely carried by the No. 2 com- 

 mon and better. 



(2) When the amount of No. 2 

 common and better underruns the 

 log scale, — 



(a) The logging cost per M net 

 lumber tally of No. 2 common and 

 better equals logging cost per M, 

 Doyle scale, and 



(b) The logging cost per M net 



lumber tally of No. 3 common 



equals logging cost per M, Doyle 



scale, times 



Doyle scale minus No. 2 common 

 " and better 



.\niijunt No. 3 common 



(c) The log cost per M net 



lumber tally of No. 3 common and 



better 



equals amount No. 2 common and 

 better divided by amount No. 3 com- 

 mon and better, multiplied by log 

 cost No. 2 common and better, plus 

 amount No. 3 common divided by 

 amount No. 3 common and better, 

 multiplied by log cost of No. 3 com- 

 mon. 



For the logs used in this study 

 the No. 2 common and better un- 

 der-runs the log scale, so that 

 after the fixed and variable log 

 costs had been made it was nec- 

 essary to further distribute the 

 costs as outlined above in the sec- 

 ond method. 



Although the stumpage and 

 carrj'ing charges are the same as 

 previously stated, they are con- 

 sidered as a part of the woods' 

 costs and are distributed against 

 the No. 2 common and better and 

 the No. 3 common the same as in 

 the logging costs. The same for- 

 mulae are used excepting the term 

 "stumpage plus carrying charge" is substituted for logging. 



Under this method the general costs remain as a fixed charge 

 against every thousand feet of lumber produced. The manufacturing 

 cost varies with the time of sawing and is charged against aU the 

 lumber as previously explained in the computations for the 50 logs. 

 The total cost as shown in Table 2 for each class of material pro- 

 duced is the sum of their respective production costs. 



The realization was computed as previously described using the 

 grade prices of the cooperator and the amount of each grade in dif- 

 ferent sized logs. This was obtained per M feet net lumber tally of 

 No. 2 common and better and also per M feet of No. 3 common. The 

 realization per M for No. 3 common and better = (per cent No. 2 



{lontinurd on page J/lf) 



