INTERPRETATION OF COST ACCOUNTS 345 



and of interest as elements of cost; and the rate of interest 

 used when it is considered. 



In the comparison of the accounts of L. E. Fay as kept 

 under the general and cost systems (Illustrative Problem 

 2, Chapters VIII and IX) it was found that a considerable 

 difference in profits on the several productive elements 

 existed under the two systems, although the net profit 

 on the whole farm was the same. Under the general sys- 

 tem, a given crop showed a greater profit than under the 

 cost system if all of it was sold in the market. It showed 

 less profit under the general system if fed to livestock. 

 These differences arose because the cost system recorded 

 charges for labor, horse labor, equipment use and other 

 costs that were not recorded under the general system. 

 Also, the cost system recorded credits for the value of 

 quantities fed to livestock, while the general system did 

 not. 



Similarly, swine showed greater profit under the gen- 

 eral system than under the cost system, due largely to the 

 fact that a large part of the expense for labor and feed 

 was not charged to the hogs under the general system. 



The second condition named as affecting the meaning of 

 profit is value of labor, horse labor, feed and depreciation. 

 The figures to use in calculating these elements of cost have 

 been discussed under their respective titles. A further 

 presentation is given in the Appendix. Anything that will 

 tend to standardize the values charged for these costs will 

 assist materially in affording a valuable comparison of 

 results among farmers. 



The effect of the operator 's wages on the profit of a 

 farm was stated above in connection with the labor income 

 explanations. 



The consideration of interest as an element of cost and 

 the rate of interest used have a considerable bearing upon 

 the profit of any productive element, but no effect upon 



