METHODS OF CONDUCTING COST STUDIES. 21 



young stock is usually kept separate from the older stock, with depre- 

 ciation playing a prominent part in. the records of the older animals. 



Where purebred stock is maintained the element of appreciation 

 from a breeding standpoint is always present, but depreciation also 

 becomes quite striking, particularly in view of risks of disease or 

 injury incurred in the maintenance of purebred herds. An important 

 source of loss arises when young animals prove to be indifferent 

 breeders. Conformation qualities are detected early in life but breed- 

 ing qualities only after maturity. At the same time a distinction is 

 noticeable in estimating depreciation in purebred herds between the 

 value of the animals as producers of salable products, such as milk, 

 and their value as breeding animals. 



In connection with the depreciation of live stock, the block value 

 of breeding stock for consumption purposes should be kept in mind, 

 as this enters into any percentage figure which is used to indicate 

 the approximate depreciation from the previous inventory value. 



In all inventories of live stock it will be seen that the fluctuations 

 in market prices have an important influence on the values ascribed 

 to each class of stock. This was particularly noticeable during the 

 war period, when the market prices of certain classes of stock increased 

 to a high level while others increased slowly, in the case of horses 

 scarcely at all. 



FEEDS AND CROPS HELD FOR SALE AND FOR FEED. 



Where it is possible to separate crops held for sale from the feed 

 that will be used for live stock, there is no question as to the basis 

 of valuation for the products held for sale. The farm value, which 

 is the market value less the cost of marketing, should be the basis for 

 valuing all crops held for sale which appear in the inventory. 



There is a difference of opinion as to the proper basis of valuing 

 feeds to be fed to live stock. There are usually two classes of such 

 feeds, namely, the salable feeds, such as oats, corn, and hay, and the 

 nonsalable, such as silage, corn stover, and low-grade hay. The 

 common basis used by most farm, accounting authorities for salable 

 product inventories is that of the farm price, which, as indicated 

 above, is the market price less the cost of marketing. This feed is 

 usually charged to stock at the going monthly farm price. The other 

 basis, that of the cost of production, is advocated by some, particu- 

 larly English authorities, who maintain that the cost of producing 

 live stock for the market should be based upon charging the feed 

 consumed at its actual cost and not at the price that might have been 

 obtained for the feed if used in an alternative way. 



In deciding which basis of valuation to use for the salable feeds, 

 one of the fundamental uses of cost of production figures in the farm 

 business must be taken into account. This important function is 

 that of affording a comparison of the profits of the various farm enter- 



