22 MASS. EXPERIMENT STATION BULLETIN 173. 



The relation of costs to receipts is the really significant fact to the 

 distributor. Costs run from a minimum of 19.9 per cent, to a maximum 

 of 31.1 per cent, of total receipts. This means that the costs of the all- 

 retail and "over 2,000" groups, for example, absorb 30 to 31 per cent, 

 of the total receipts, a portion more than 50 per cent, greater than the 

 part taken by the second and third groups. 



This percentage which the expenses bear to receipts may be called the 

 operating ratio. It is lowest in Groups II and III and highest in Group 

 IV. The lower the ratio the more economical the operation of the plant. 

 The operating ratio in any business is very significant. In milk distri- 

 bution 20 per cent, is probably a low ratio and 30 per cent, a high ratio, 

 but much more accounting must be done to determine this. In all in- 

 stances the more expensive distribution is due both to higher processing 

 and higher delivery costs and, in the fourth and all-retail groups also 

 to higher overhead expenses. 



Comparative Costs by Localities. 



Table IX presents comparative cost data by towns. In these figures 

 no attempt has been made to separate costs into processing and delivery. 

 All the firms operating in Amherst and Walpole are in the "500 quarts or 

 under" class; all bat three of the Haverhill and Pittsfield firms are dis- 

 tributing less than 1,000 quarts per day; hence the firms interviewed 

 doing a daily business of 1,000 quarts and more are almost all in Spring- 

 field and Worcester. 



The data show plainly the greater cost per quart in the two larger cities, 

 a cost which is seen in practically all items entering into distribution. 

 Few conclusions of significance as regards variations by localities can be 

 drawn from the figures giving total locality costs. 



