30 N. H. Agri. Experiment Station [Bulletin 251 



dollar of sales is $.0011. For a store delivering 5 per cent of the 

 grain, the cost per dollar of sales is $.002. This ratio increases as 

 the amount delivered increases, but for reasons explained in the pre- 

 vious discussion, it is impossible to state the net cost for delivery. 



When the five lowest and the five highest combinations of fixed, 

 labor, deliveiy and other cost ratios are selected, the average possi- 

 ble costs of these stores show extremes of $.0581 and $.2009 per dol- 

 lar of sales. It is apparent that there is considerable chance for im- 

 provement. 



In general, the results obtained from tlie survey suggest that the 

 managers have not thought of their business in terms of operating 

 ratios and turnovers. The usual procedure followed in attempting to 

 reduce costs was through increasing total sales. Although this is con- 

 sidered a good method, it is not the only way; neither is it certain to 

 reduce costs. Much depends upon the management and how carefully 

 the costs have been analyzed and the gross margin budgeted, whether 

 or not the business will show a profit instead of a loss. There are 

 stores where readjustments can be brought about with the present 

 volume of business operating at the same gross margin which will 

 show a profit providing the flexible costs such as labor are reduced. 



When sales per man vary $40,000, it would seem that either more 

 business should be forthcoming to some stores or the number of peo- 

 ple employed reduced. Further study should be made of the labor 

 distribution in the efficiently operated stores where there are low labor 

 costs per dollar of sales and high average yearly sales for those em- 

 ployed. The limited amount of information on this subject given in 

 this report indicates that there are possibilities of checking on the 

 reasons for the great differences in labor costs between stores. Fur- 

 thermore, labor costs usually constitute over half the total costs and 

 are flexible whereas many of the other costs are not so easily changed. 



Grain dealers appreciate that they are not bankers and many wished 

 they were on a cash basis. In fact they considered credit their worst 

 problem. The amount of information at hand shows the cash stores 

 do have an advantage. They had lower costs, took smaller margins 

 and sold grain at a lower average price than those extending credit. 



Basing final opinion on the data presented, there is no doubt but 

 that considerable variation does occur in the operating costs of grain 

 stores as well as in the selling prices of feed and grain. It has been 

 pointed out that some of these costs are flexible so that they can be 

 changed. In other words, there are opportunities to reduce costs in 

 many stores and bring about a greater net profit as well as to reduce 

 the gross margin or the part which the fanner pays to the dealer for 

 his services. 



