APPENDIX 403 



ment. Whatever he makes above this 4% is to compensate 

 him for his risk in operation as well as for his ability as a 

 manager. Such risk of operation and managing ability should 

 receive a just reward in the way of profit. Such profit would 

 be the result of the year's operations after charging 4% in- 

 terest on capital as part of the cost of production. 



In order to have one rate applicable to all property on the 

 farm, the 4% rate is used, also, in connection with buildings, 

 equipment and livestock. These cannot be supported logically 

 as being properly considered at 4%, since "risk in operation" 

 and "risk in ownership" are almost synonymous. However, 

 a charge to Building Expense, Equipment Expense or an ap- 

 propriate livestock account for insurance premiums tends to 

 offset the "risk in ownership" in many instances. 



Calculation of Wages. A Labor and Horse Labor Conver- 

 sion table is given in Illustration 75 to assist in calculating 

 wages. It is especially valuable in figuring the value of labor 

 or horse labor spent on various farm enterprises. By the use 

 of the Labor and Horse Labor Conversion table one can readily 

 find the values that correspond to the hours shown in the 

 yearly labor or horse labor summaries. The table is arranged 

 for showing the value when the rate of labor per hour and 

 the number of hours are known. Any rate from 8 cents to 

 30 cents inclusive may be used from this table. Any number 

 of hours may be used directly or indirectly. The table shows 

 the specific amounts for each hourly rate and for the hours 

 1 to 10 inclusive; and all multiples of ten up to and including 

 500 hours. From these figures the value of labor for almost 

 any number of hours may be derived. 



The conversion table is used in the same way for both man 

 and horse labor. As a rule the horse labor calculations use 

 the lower and the man labor the higher hourly rates. 



Assume that the yearly labor summary shows that the total 

 time spent in Field No. 1 for the year is 450 hours, and it is 

 determined that the cost of labor for the year is 22 cents an 

 hour. 1 The value of the labor to charge to Field No. 1 account 

 under such conditions is found to be $99. This result is ob- 



>See "Hourly Cost of Labor," Chapter VIII, 



