200 TIMBER VALUATION 



Exactly what constitutes the investment per M is sometimes 

 difficult to determine. SmaU operations present no special 

 difficulty because the capital is small, consisting of relatively few 

 tools, a team or two, wagons or sleds, and the amount necessary 

 to carry the payroll, interest charges, taxes, and insurance. The 

 sum of these items divided by the number of M feet to be logged 

 gives the investment per M. Furthermore, the contract prices 

 being paid in the region for the different steps from the stump to 

 the stick furnish the best kind of a check since they are the com- 

 bined judgment of the community as to what must be invested 

 per M to get the desired results. Much more difficult to deter- 

 mine accurately is the proper charge in large and complicated 

 enterprises. However, the following Hst of items which may 

 enter into this total may be useful in checking over to make sure 

 that nothing has been overlooked : 



1. Permanent improvements or durable equipment Hke a 



railway or sawmill to be used over a long period. The 

 charge per M is determined by dividing the total for these 

 items by the whole amount of timber to be manufactured 

 with them. 



2. Operating costs such as wages, food supplies, destructible 



tools, interest on operating capital, taxes, overhead 

 costs, etc. These are usually totaled annually and di- 

 vided by the cut for that period. 



3. Maintenance charges such as depreciation costs, amortiza- 



tion payments, insurance, etc. These may be most con- 

 veniently calculated on an annual basis. 

 Freight Charges. — Absolutely and relatively freight charges 

 are the most important single item in wood product costs. For 

 example in lumber retail prices the various steps are divided as 

 follows on the average: 



Percent 



Logging 25 



Milling 20 



Freight 27 



Wholesaling 3 



Retailing 25 



100 



