40 BULLETIN &94, U. S. DEPARTMENT OF AGRICULTURE. 



having definitely in mind the relation that exists between the 

 special enterprise and the farm business as a whole, it is often possible 

 to bring out facts leading to conclusions not indicated by the enter- 

 prise alone. 



These data are extremely valuable also in the calculation of the 

 overhead charge which each productive enterprise on the farm 

 must carry. For example, in the study of the cost of producing 

 wheat, unless the wheat land is valued high enough per acre to 

 cover the nonproductive acres on the farm, the carrying charge for 

 these nonproductive acres is not included in the cost of the wheat 

 crop. There is also a certain amount of farm labor spent in the 

 maintenance of the farm which it is impossible properly to distribute 

 over the productive enterprises without having a record of the 

 entire farm business, though in localities where the detailed cost- 

 accounting method is followed it may be possible to arrive at a 

 percentage figure which may be used to approximate the overhead 

 charge on farms studied by the survey method. 



NORMAL COST FACTORS. 



A very important function of the enterprise cost study is to estab- 

 lish normal figures for various operations, yields, and costs for each 

 of the farms visited. By "normal" is meant the average over a 

 number of years. The advantage of this information lies in the op- 

 portunity it affords of comparing the results for a particular year 

 with what may be expected in the long run. Such comparisons 

 provide a fundamental background for a more accurate study of 

 the variations that are likely to occur in connection with the enter- 

 prises considered. 



BASIC ELEMENTS OF COST. 



From the data obtained in the enterprise surveys may be deter- 

 mined the basic and stable factors of labor and materials necessary 

 to production in the given enterprise, which constitute a basis for 

 practical estimating of such costs at different rates for labor and 

 materials. Further, the method allows the covering of a large area 

 and the study of a greater number of instances than the detailed 

 cost-accounting method, with a given expenditure of time and money. 

 The enterprise surveys yield data on special crops or live-stock en- 

 terprises which it would be difficult or impossible to obtain through 

 the cost-accounting method, as the farms are often so widely scattered 

 that the accounting method would be too costly. To obtain represen- 

 tative evidence of the economic factors of the production of an enter- 

 prise, it is advisable to obtain a volume of data that can not be 

 economically supplied by the latter method. 



