HIGHWAY COST KEEPING. 3 



For example, the cost of men using picks and shovels on excavation 

 who are directly expending their efforts on that piece of work is a 

 direct labor charge. A superintendent in charge of a road job is not 

 directly expending labor on excavation, but is engaged in directing 

 the prosecution of all kinds of work and his expense is an indirect 

 labor charge, chargeable pro rata against the production of all the 

 work units he may be supervising. Other examples of indirect labor 

 are the services of watchmen, timekeepers, and water boys. 



MATERIALS. 



Materials also are divided into two similar classes — direct and indi- 

 rect. All materials entering the product as an integral part of its com- 

 position are called direct materials. All materials chargeable against 

 the production but which do not enter directly into the product 

 as an integral part of it are called indirect or expense materials or 

 sometimes supplies. The cement, stone, and sand that are mixed 

 together to form the concrete of which a concrete road is constructed 

 are all direct materials, but the oil used for lubricating and the gaso- 

 line for operating the mixer in which these materials are prepared 

 for use are indirect materials or supplies. It is easy to charge 

 direct material cost, but often it is very difficult to charge to each 

 product its correct share of indirect material cost. 



Small, or hand, tools not used as a part of some plant unit and 

 which have such a short period of usefulness that they are seldom 

 used on more than one job, usually are considered supplies and 

 therefore are part of the indirect materials charged to the work. 



PLANT AND EQUIPMENT. 



" Plant" includes such physical property used on the work as 

 land, structures, machinery, live stock, and tools of a more perma- 

 nent character than those referred to as supplies. "Equipment" 

 is a less inclusive term and is interpreted generally to mean the 

 smaller and especially the movable plant units. The cost of the 

 service of "plant" can be charged most readily in the form of a 

 daily rental against the work upon which it is used. This rental 

 should be charged whether the equipment be owned by the operat- 

 ing organization or leased from other owners. It consists of "operat- 

 ing charges," which are — 



(a) The expense of operation, 



(b) The average cost of repairs, 



(c) Charges for the time spent in idleness, 

 and "fixed charges," which are — 



(d) Charges for depreciation, 



(e) Interest, 

 (/) Taxes, 



(g) Insurance. 



