COST ACCOUNTING 271 



ductive elements in the farm under consideration, in 

 Illustrations 54 and 55, were as follows : 



Oats ($300 $250) $50 



Corn ($500 $400) 100 



Potatoes ($400 $375) 25 



Swine ($100 $60) 40 



Cattle ' ($300 $210) 90 



I 



Total Interest on Investment, as per 



Illustration 55 $305 



These interest charges are not the same relatively for each 

 productive element, hence a charge for interest as an ele- 

 ment of cost on the farm in question is justified. Corn, for 

 example, used four times as much property in its pro- 

 duction as did potatoes. Therefore it was charged with 

 $100 for the interest on that property, while potatoes were 

 charged with only $25 for interest on capital used in their 

 production. 



Labor Income and Capital Income. It is sometimes 

 stated that the labor income (income due to management) 

 cannot be distinguished from capital income (income as 

 a result of investing capital in the business), unless in- 

 terest is charged as part of the cost of production. 



An analysis of Illustrations 54 and 55 may tend to in- 

 dicate how labor income of the farmer is distinguished 

 from capital income when interest is not considered as 

 an element of cost. Such analysis is presented in Illustra- 

 tions 56 and 57. 



It is noted from a comparison of the main results ob- 

 tained in Illustrations 56 and 57 that when interest is not 

 charged as an element of cost, the income due to manage- 

 ment, and income as an individual can be obtained readily 

 by a simple calculation involving only the items in the 



