Costs and Values in a Logging Operation. 683 



used in apportioning the construction cost) is the f. o. b. mill 

 value minus the other costs. 

 i=v — c 



The index value per acre (I) is the sum of the average stand 

 per acre of each species multiplied by the index value of that 

 species. 



I=:s X i (chestnut) -\-s x i (poplar) -\-s x i (oak) +etc. 



The total railroad construction cost divided by the number of 

 acres is the railroad construction cost per acre=:R 



The railroad construction cost per acre should be distributed 

 among the different species and products in order to obtain the 

 railroad construction cost per unit quantity (thousand feet, cord, 

 or piece) of each product (=r) 



The first step is to divide the construction cost per acre by 

 the index value per acre thus obtaining the construction cost per 



R 

 dollar of index value= — ^j^ — Then the construction cost per unit 



of quantity for each product (r) is the index value of that pro- 

 duct multiplied by the construction cost per dollar of index value 

 R 



Having obtained the construction cost per unit quantity (thousand 

 feet, cord, or piece) of each product, this can be added to the other 

 costs in order to obtain the total costs of operation. Then the 

 stumpage value can be obtained by any of the usual methods. 



The following table shows the application of this plan to 

 the same set of conditions assumed for the first example, using 

 both the direct percentage formula and the Forest Service formula. 

 By using the first formula, the operator's profit is distributed on a 

 value basis, since it is taken as a direct percentage of the gross 

 value. In the Forest vService formula it is a percentage of log- 

 ging cost plus stumpage, and is affected by the value of the pro- 

 duct only to the extent that the construction cost is apportioned on 

 this basis. 



