case the firm will own an additional 384 crates. These extra crates, 

 equivalent to 20 percent of daily firm volume, permit some crates to be 

 in a repair status, and if necessary provide sufficient crates so that empty 

 crates can be waiting for reloading. 



Both fixed and variable costs are associated with the ownership of 

 crates. Fixed costs include interest at three percent, taxes at one percent, 

 insurance at one percent, and time depreciation at 20 percent of new 

 investment cost of $3 per crate. Variable costs include wear depreciation 

 and repairs. Both of these variable costs bear a relationship to use of 

 the crates. The type of crate used in New England has a life of about 

 750 trips as determined from the survey of operating firms. Repairs in- 

 clude only replacing broken rounds and repairing doors. The annual 

 rates for repairs and time and wear depreciation are shown in Figure 6. 



Average number of trips per year for the crates for each firm was 

 developed by dividing the number of crates owned into the daily truck 

 crate capacity of the firm and multiplying by 247 days. This was applied 

 to the line in Figure 6 labeled "Repairs plus time or wear depreciation" 

 to determine annual rate for repairs and depreciation for a new $3 crate. 



Automobile and Truck Costs 



Costs incurred by assembly firms to operate automobiles in which 

 crews are transported was set at seven cents per mile per crew. There- 

 fore, a suitable automobile owned by a member of the crew is specified. 



Some truck costs are associated with ownership and others with use. 

 However, truck costs do not break neatly into the two classical divisions 



Figure 6. Relationship of Annual Rates of Repairs and Depreciation 

 for Crates to Crate Trip Per Year. 



X 



T 



T 



200 400 600 



Level of crate use— trips per year 



27 



