QUESTIONS OF PRINCIPLE 53 



this suggested simplification of farm costing is that it 

 deprives the farmer of all basis for valuing his produce. 

 A man producing milk knows the cost of all his arable crops 

 collectively, but how can he arrive at the cost of mangolds > 

 or of clover -hay, or of cabbages, or of any other arable 

 crops used in milk -production, and consequently at the cost 

 of the milk itself ? The method drives the farmer to guess 

 at costs for which a more accurate basis is necessary, and 

 this is a very serious objection. At the same time it is 

 a method which might prove useful in education as an intro- 

 duction to more intensive methods, whilst there may also 

 be not a few farms where the whole of the produce of the 

 arable land is consumed at home, on which one cost figure 

 for all arable crops collectively would be all that was 

 required for accurate costing work. 



On-cost and Establishment Charges. No matter how 

 carefully the analysis and distribution of expenses may be 

 effected, there will always be certain items which cannot be 

 apportioned or assigned directly to any account. Such 

 matters as lost time, the foreman's or bailiff's wages, repair 

 of roads, fences, &c., keep of the farmer's nag-horses or 

 motor, these and similar things are part of the cost of pro- 

 duction, but they cannot be allocated at the time of payment 

 to any department or departments. At one time it was not 

 customary, in industry, to take account of these things 

 in cost determinations, but they were carried to the debit 

 of the profit and loss account. It is now almost universally 

 recognized that, although this method had simplicity in 

 its favour, ' an efficient check upon the indirect expenses 

 can only be obtained by establishing a relation between the 

 direct and indirect expenses ',* and the indirect costs must 

 be collected into an account the balance of which is distri- 

 buted over the accounts of the productive branches of the 

 enterprise. The basis of the distribution is various. In some 

 concerns this balance is divided in proportion to the amount 

 expended on labour, or on materials ; in others, in propor- 

 tion to the labour and materials ; in others, again, where 



1 Garcke and Fells, op. cit., p. 89. 



