Feed Distribution Costs 



Application of standardized costs to the several input-output quan- 

 tities establishes the relationship between cost and the volume of feed 

 distributed. The costs used are appropriate to New England conditions. 

 The distribution costs are classified as truck, driver, administrative per- 

 sonnel and miscellaneous. 



1. Truck Costs — A function relating cost to distance expressed in 

 miles was developed from technical data provided by several feed dis- 

 tributing firms and equipment manufacturers. Truck costs include a 

 number of items which are either fixed or variable costs or a combina- 

 tion of both. The fixed costs include truck registration, insurance, license 

 and anti-freeze. The variable costs associated with use are gas, oil, and 

 lubrication. Those costs associated with use and ownership are deprecia- 

 tion, interest on investment, maintenance and repair, taxes, and tires. 



A cost was derived for each truck-cost item for each of several an- 

 nual mileage levels, and the costs were summed to determine an annual 

 total operating cost for each respective mileage level. A relationship 

 between the two was derived by the least-squares method, and the equa- 

 tion is: 



AC = 3,157.5N + 0.18309M 

 where AC is the total annual operating cost in dollars, N is the total 

 number of trucks, and M is the miles of travel per year. The annual fixed 

 cost per truck is $3,157.50 and the variable cost is 18.3 cents per mile. 

 Figure 5 illustrates the relationship. The equation is used to determine 

 the annual cost of operating the trucks for each firm size at each of the 

 three density levels. These costs and the average cost per ton are given 

 in Table 17. 



2. Driver Costs — Truck driver wage rates vary considerably in the 

 New England region. Generally, rates become progressively lower, the 



Table 17. Truck Costs for Six Firms Distributing Feed 

 at Three Density Levels 



Figures across are tons delivered annually. 

 ' Firm F cannot operate at this density level. 



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