Equipment acquisition cost 

 Equipment, I = — *— * ^ x * ' 



Equipment acquisition cost + salvage value 

 Motorized equipment, I = — ■ ' ' 2 x -07 



Land acquisition cost x .06 



Variable cost, interest at .07 x 1/4 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 \\ 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 employee, 



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 or 

 approving the rates in each State involved. 



Supplies, utilities, etc., 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 bundle, looseleaf, 

 and strip tobacco. For firms processing tobacco in more than one form, all 

 costs that were directly attributable to that process were assigned to it by 

 accounting and managing personnel within the firm. Those costs that were joint 

 were assigned according to breakout by individual firms and weights learned in 

 other studies of industry capacities. 



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