STUMPAGE VALUES 183 



That is, if the price for logs is taken as the basis of prices, 

 and the logger computes his requisite profit roughly as a per 

 cent of average logging costs, stumpage value is the residue 

 after subtracting costs and profit from sale prices. 



In the same way, milling costs and profit may be subtracted, 

 and (Method A) 



Y m =S-(Lc + Mc + D}-q%(Lc + Mc + D}. (R) 



Should milling require a different profit from logging, these 

 costs and profits may be separated, using r per cent for profit 

 in milling. 



Y m = S - (Me + MD + Lc + LD}-r% (Me + MD) 



-q%(Lc + LD). (RO 



The computation of profits as a per cent of operating costs, 

 if based on the results of individual operations, would place a 

 premium on extravagance. But when gauged by average costs 

 of well-conducted operations of similar size, and applied in deter- 

 mining appraisals in advance of cutting, no such objection can 

 be urged. 



Method B assumes that stumpage is a part of the total 

 operating costs, and that the money invested in it is entitled 

 to share in the profit. By thus adding stumpage to the sum 

 of the other expenses, the total of costs plus profit equals gross 

 income, or sale value. Profit thus becomes a fixed per cent 

 of this sale value, and is independent of operating costs. Any 

 increase in operating expense of logging is subtracted from cost 

 of stumpage, and vice versa. 



The formula is: 



Y m = S - (Lc + Me + D) - q% (Lc + Me + D + F m ), 

 which reduces to 



Y m = f* -(Lc + Mc + D). (R.) 



I T (l/o 



This formula was formerly advocated by the Forest Service 

 for use in small sales where but little capital is invested, but has 

 been set aside in favor of Method A. The profit q% should be 

 exclusive of a salary of $1200 to $1500 for the operator (34). 



