Equipment acquisition cost „ n7 

 Equipment, I = — a c ~ x . U/ 



Motorized equipment, I = Equipment acquisition cost + salvage value x <07 



Land acquisition cost x .06 



Variable cost, interest at .07 x % year usage 



Estimated 1968 Costs 



Costs of operating during 1968 were computed as follows: 



Wages. - -Increased to $1.60 per hour if $1.40 or less; 



Increased 20 cents per hour if the average was more than $1.40 for 

 a particular job; 



All overtime computed at 1% times the above rates. 



Salaries* - -Executive and management salaries were increased 11.1 percent to 

 reflect the average rise in management wages from the average date of the 

 survey period, December 1, 1966, to December 1, 1968. 



Office workers' salaries were increased 12.5 percent to reflect average 

 salary increases of office workers during the same period. 



Other company costs . --FICA: These costs to the company were computed on 

 the new rates and maximums effective in 1968--4.4 percent on $7,800 per emplr 



Unemployment compensation: Usual 1968 rates for each State involved were 

 used for the tobacco processing and storing firms. 



Workmen's compensation: Rates were obtained from the board setting 

 approving the rates in each State involved. 



Costs for supplies, utilities, and related items were updated to reflect 

 costs in effect during January 1968 as reported in the Survey of Current 

 Business, U. S. Department of Commerce, Office of Business Economics. 



Method of Allocation 



Tobacco Processing 



Tobacco processing costs were divided into costs for leaf and strip 

 For firms processing tobacco in both forms, all costs that were directly attr 

 utable to that process were assigned to it by account 

 within the firm. Those costs that were joint were assigned accordi 

 breakout by individual firms and weights learned in othe; try 



capacities . 



11 



