Cost item 



Basis for allocation 



Fixed costs (Cont.) 

 Quality control 



Office furniture and equipment 

 Autos 



Trucks and trailers 

 Forklifts and pickups 

 Stockroom and other equipment 

 Shop equipment 

 Fire equipment 

 Insurance 

 Taxes 



License and bond 

 Lease and rentals 

 Home office 



Weighted according to usage 

 Green-weight basis 

 Green-weight basis 

 Green-weight basis 

 Green-weight basis 

 Value of equipment and usage 

 Green-weight basis 

 Included in building cost 

 Green-weight basis 

 Green-weight basis 

 Green-weight basis 

 Green-weight basis 

 Green-weight basis 



Storage and Services 



Fixed costs 



1. Building depreciation: Based on area devoted to tobacco storage and 

 total warehouse area as shown on warehouse records. Included as tobacco storage 

 area were clearances and aisles as provided for in CCC storage contracts plus 



2 feet of the main aisle space. The ratio of storage area and working area to 

 total area was used as a basis for determining depreciation costs allocated 

 directly to storage and services. 



•For example, assume that 90 percent of the warehouse was used for storage. 

 In this case, 90 percent of the total depreciation was chargeable directly to 

 the storage operation. The remaining 10 percent would then be allocated to all 

 services including storage based on the volume handled in each function. 



2. Equipment depreciation: Cost for equipment could be identified with a 

 particular function or allocated directly. For example, scales were allocated 

 directly to weighing. Motorized equipment (autos, trucks, forklifts) was allo- 

 cated according to use. A weighting system was devised using estimates from 

 each firm involved and checked with industry people to determine if these rela- 

 tive weights were realistic. 



13 



