DIVIDENDS IN COOPEBATIVE GRAIN COMPANIES. 



9 



profit, this to be distributed among its patrons. Independent sales 

 fall outside the discussion of proration of general profits, because 

 the profits from these accrue entirely to the elevator making the 

 sale. If profits are pooled and the expenses of all the elevators 

 participating are also shared on a common basis, the method of 

 finding the rate for the division of the profits is merely a matter 

 of dividing the profits by the number of bushels of grain handled 

 by the entire group of elevators. If, on the other hand, the varying 

 rates of expense incidental to operation in the different elevators 

 and the various advantages in selling which have occurred during 

 the year are taken into consideration, the division of profits then 

 becomes much more complicated. 



By compiling a formula which takes into consideration all the 

 factors which go to make up the rate of profit, the amount of profit 

 for each elevator can be determined, and this will allow a distribu- 

 tion of profits on varying rates to the patrons of the different ele- 

 vators in accordance with the economic advantage of each separate 

 station. 



For purposes of illustration it will be assumed that in a certain 

 organization there are five elevators, each operating on a different 

 rate of expense, all shipping to the central organization, which, act- 

 ing as their agent, disposes of the grain through its terminal ware- 

 house. In such a case each elevator must keep its own books, so that 

 it will know the amount of expense incurred and the number of 

 bushels handled. At the end of the year, when the central organiza- 

 tion has determined the total amount of profit, settlements will be 

 made with the various locals according to the following table,^ from 

 which it will be seen that the average cost of operation per bushel 

 is $0.03. , 





Bushels 

 handled. 



Elevator 

 expense. 



Share of 

 profit for 

 each ele- 

 vator. 



Individual 

 expense 



per 

 bushel. 



Elevator A 



500 



500 



1,200 



2,400 



600 



■ «25 

 30 

 40 

 40 

 21 



S40 

 35 

 116 

 272 



57 



$0. 05 



Elevator B... 



.06 



Elevator C 



. 0333 



Elevator D... 



r . 0167 



Elevator E..... 



.035 









5, 200 



156 



520 









The figures in this table are determined by the use of a formula 

 which is derived from the combination of various items which 

 must be taken into consideration when transacting the business 

 under this arrangement. Before setting down the formula, the 



1 These figures are not taken from any firm, but are used merely for illustration. 



