22 



HARDWOOD RECORD 



,»tpcnait.iiios for ropairs and maiiiteuniu-o aro intoiuUxi to mamtajn 

 tho plant in a oomtition of olVu'io.ioy, and do not gouornll.v inorcaso 

 tho orisinal valuo of tl.o plant or add to tho torni of its ostablishod 

 lifo. In otlior words, ordinary ropairs and renewals aro for tho 

 purpose of koopins ll>0 plant in an oporaiins condition and as suoh 

 cannot bo cnpitalizod or considorod as an olVsot to doproi-iation. 



In the distribution of operating aocounls, wlioro one account is 

 atVected by the distribution of another, tho charge should bo niado 

 on a tixt>l money basis rather than on a percentage. For instance, 

 .H separate cost is made for water and steam. It takes steam to 

 pump water and it takes water to make steam. If you get a 

 water cost first it is obviously necessary that a fixed charge be made 

 for steaTU used and vice rcrxd. 



Machine shops, blacksmith shops, etc., are treated as separate 

 institutions and must carry all of the expenso of their departments. 

 .\ sj-stem of shop orders provides for direct charges on difTorcnt 

 .iobs, but there is a certain amount of superintendence, labor and 

 material which can only be distributed over the whole on basis of 

 direct shop labor charged during the month. 

 Logglns Costs 



Having provided a basis for correctly distributing labor, material 

 and expenses, we are now ready to proceed with our cost work. 

 I am speaking now of an average southern hardwood operation 

 without planing mill, dry kiln, or other attachment. 



First and most important is the logging cost. This is most 

 dirticuU to obtain, but most necessary to havo. Logs are cut at 

 irregnl.ir periods, depending largely on physical conditions and may 

 bo banked on log spurs, on a common carrier, or team hauled direct 

 to the mill. For each of these banking grounds a separate cost 

 should be niado. The schedule of accounts covering the average 

 logging operation, aro as follows: 



(1> Loo Camp: To this account charge all expense of operating log 

 camps. InoUuiing a proiwrlion o( llie original cost o( construction, and the 

 opcr!\tlou of a company hosinllng house. 



(■J> TtMBK.K CiTTiXG : Timber cutting and team hauling should con- 

 stilnto one Job : otherwise It boiMmes necessary to scale logs at stump for 

 Umbor cutters and again at banking grounds for the team haulers, making 

 tH>sstble the dllTercnces which always arise between dtlToreut scales. This 

 account is provided, however, for use where timber cutting Is a separate 

 operation, and covers all expense of falling tree and sawing Into log 

 lengths. 



(3) Tkim 1I.uii.ing : This account i-overs cost of loading on wagons and 

 hauling to Ivinking grounds. Including barn expense. Where timber cutting 

 and team hauling are ouc job charge all expense to this account 



(4) IxHis m;Kcn.\SEn : Cliarge to this account cost of logs purchased. 

 (51 Ix<.\DiNO AND Skidping : This account covers cost of loading and 



skiiKting logs for shipment to mill. Where skldder is used in banking logs 

 which are not immediately loaded separate account should be kept of such 

 expense. 



(6> Loo Spprs ; .\s it would, obvio'.isly. be unfair to charge into a 

 monthly cost the entire expense of constructing log spurs such expense, as 

 incurred, should be deferred and only a propi^rtion charged to the monthly 

 cost which will retire the entire cost, with the exception of the rails, by 

 the time the timber ailjaceut to this track has been removed. This propor- 

 tionate charge should also cover cost of taking up track and delivering ma- 

 terial to new location. Kails having a salvage value are carried in a sep- 

 arate account and depreciation thereon charged to a monthly eost. Where 

 rails are replaced the difference between the depreciated value and the scrap 

 value should be charged to this account. Kepairs and maintenance of these 

 tracks is a charge to the monthly cost, 



(71 L^viGiXG K.Mt.KOAD OrF-UATioxs : This represents the expense a log- 

 ging railro;id delivering logs to mill, or to a common carrier, including de- 

 preciation, boiler insurance, revviirs and maintenance of engines, cars. etc. 



(5) Freight: Tliis should cover freight charges made by a common 

 carrier for hauling logs over its own line. 



(91 GE^■F-KAI. ExrENSK : This covers all charges of a general nature 

 that cannot Iw charged direct to any of the above accounts. I am going 

 Into considerable detail in explaining the manner In which I arrive at my 

 log eost, as this is the foundation for all other costs. 



The first statement to be prepared is one showing all the charges 

 to the above accounts for the month, and which is really an analysis 

 of the logging expense by departments. This I call ' ' Cost of 

 Logging," although the statement does not give the final cost of 

 logs put through the mill. In order that you may follow me better 

 I have had a photograph made of the statement on which the 

 figures shown are artificial and used for illustrative purposes only. 



"We assume, to start with, that 800,000 feet of logs were cut and 

 team hauled during the month by company teams, of which 500,000 



feet were banked on log spur No. 1, SoO.OOO feet on rails of coninion 

 carrier and 50,000 foot were hauled direct to tho mill. First, wo 

 have the expense of tho log camp. This is a company operation 

 and is a proper charge to these logs. Tho total expense is $C0 or 

 an average of 7VjC per M feet on the 800,000 feet. Figuring the 

 number of feet put out on tho diir(?rent banking grounds at TVjc 

 per M feet, we are at a charge of .tST.fiO against the 500,000 foot 

 banked on log spur No. 1, $18.75 against the 250,000 foot banked 

 on common carrier, and $3.73 against tho 50,000 foot banked at 

 tlie mill. 



Next is timber cutting. I have assumed that timber cutting 

 and team hauling is all one job, so have shown no expense under 

 this caption, but havo included same with the team hauling. As 

 1 have stated, the account is provided for where timber cutting and 

 team hauling are separate jobs. 



The next item is team hauling by company. Working on the 

 same theory of SOO.OOO feet of logs banked, we arrive at an average 

 cost of if.'^.SO, which is distributed over tho different banking 

 grounds in the same manner as wo distributed the expense of 

 the log camp. 



Wo now assume that in addition to this 800,000 feet of logs 

 banked by company teams there were 200,000 feet more 

 banked by contractors, of which 100,000 feet were put out on 

 spur No. 1, 50,000 feet on common carrier and 50,000 feet hauled 

 direct to mill at an average cost of $3.25 per M feet. This expense 

 is distributed on the 200,000 feet of logs put out. 



Now we foot up the statement and find that 1,000,000 feet oif 

 logs have been cut and team hauled during the month, of which 

 (500,000 feet were banked on log spur at a cost of $2,112.50, or 

 $3.52 per M feet, 300,000 feet on common carrier at a cost of 

 $1,056.25, or $3.52, and 100,000 feet at mill at a cost of $341.25, 

 or $3.41. You will note I sljow an average cost of $3.51, but that 

 is not the proper cost to use, as you have an actual cost through 

 the distributions above referred to. 



The remaining items do not apply to tho cost of logs banked, 

 but cover the expense of loading and delivering logs to the mill, 

 ;ind are simply assembled here for use in the final cost. 



We will assume that during the month there was loaded and 

 hauled to the mill 1,500,000 feet of logs, of which 1,200,000 feet 

 wore loaded on spur No. 1 and 300,000 feet on common carrier. 

 Tho first item of loading and skidding is figured on 1,500,000 feet, 

 as it is assumed that these logs were loaded by company equipment. 

 The second item of log spurs, however, is figured on only 1,200,000 

 feet, as only that amount of logs came over the spur. Logging 

 railroad operation, freight and general expense are figured on the 

 1,500,000 feet. In explanation of the freight charge, it is assumed 

 that the logs coming off of spur have been hauled by company 

 equipment to junction point and from there hauled to mill by 

 common carrier, and as necessarily follows, the logs loaded on 

 common carrier, while loaded by company equipment, are liauled 

 to mill by the common carrier. 



The nest statement (No. 2) is one to which is carried forward 

 the distributions previously arrived at and on which the expense 

 for the month is added to any existing inventories. First we have 

 (1) Timber Cctting : This Item Is provided for use where timber cut- 

 ting Is a separate operation. 



(21 Basked on Loo SrcK No. 1 : We assume that there has been banked 

 on the spur during previous months 3,000.000 feet of logs at an average 

 cost of $3.50 per M feet, which are still on hand. Starting with this we 

 bring over and add to same the 000.000 feet banked during the current 

 mouth at ?3.52 per M feet, and get tottil available logs of 3.000,000 feet at 

 an average cost of $3.50-f- per M feet. As I have said, there was loaded 

 and hauled away from the spur during the month 1.200,000 feet. This 

 amount of logs is here deducted at this average price of $3.50-f per M feet 

 and carried forward to another account I shall call "Hauled to Mill by 

 Railroad." After making this deduction we find that there remains banked 

 on the spur 2,400.000 feet at an average cost of ?3.50-f , which Is the In- 

 ventory value of these logs, and which is the starting point for the next 

 month's calculations. If there is more than one log spur, number same 

 and figure each separately as this one Is figured. 



(3) Banked on Common Carrier : Here an inventory was carried over 

 of 1.000.000 feet at $3.50, to which is added the 300.000 feet banked and 

 the 300.000 feet hauled away are deducted and the cost worked out in the 

 same manner as on logs banked on spur. 



(4) Banked at Mill : An Inventory was carried over here of 50.000 



