14 



BULLETIN 130, U. S. DEPARTMENT OF AGEICULTUEE. 



FIXED COSTS. 



The term " fixed costs" embraces all costs other than labor and 

 cash costs that enter into and make up the total cost of production. 

 Although these costs are indirect, they must be given due consid- 

 eration before the total cost can be determined. Under this group 

 are such items as interest and taxes on real estate, the cost of the 

 use of machinery and use of buildings, and overhead expense. These 

 fixed costs for the Wellman orchard for 1911 and 1912 are given in 

 Table VII. 



Table VII. — Fixed costs on the 14.74-acre Wellman apple orchard, containing 527 trees, 



for 1911 and 1912. 





Distribution of cost, 



1911. 



Distribution of cost, 



1912. 



Item of cost. 



T °«- SL 



Per 

 tree. 



Per 

 barrel. 



Total. 



Per j Per 

 acre. tree. 



Per 

 barrel. 





S31.68 



241. 04 

 22.19 



$2. 149 



16. 353 

 1.505 



$0. 060 



.457 

 .042 



SO. 034 



.257 

 .024 



831. 68 



241. 04 

 29.74 



$2. 149 



16. 353 

 2.018 



SO. 060 



.457 

 .057 



$0. 015 



Land rental (interest and taxes 5.905 



.115 





.014 







Total fixed costs for season 



294. 91 



20. 007 



.559 



.315 



302. 46 



20. 520 



.574 



.144 



i The machinery included here is used on several orchards on this farm, and the charge here shown is the 

 pro rata share for this orchard, being about one-third of the total amount. 



In the Wellman orchard these costs amounted to 31.5 cents per 

 barrel in 1911 and 14.4 cents per barrel in 1912. As the total of 

 these costs varies but little from year to year for the same orchard, 

 the cost per barrel is directly proportionate to the yield. 



The major portion of the fixed costs is in the interest on the invest- 

 ment and the taxes on the land. The land rental is figured at 5 per 

 cent on the estimated inventory value of the orchard, plus the taxes, 

 which amounted to 0.905 per cent on this same value. In 1911 this 

 land rental was 81.8 per cent of the fixed costs and in 1912, 80 per 

 cent. 



No account has been taken of the depreciation of the orchard. 

 This factor will depend largely on the variety of apples grown, the 

 age of the trees, the soil and climate, and the cultural methods 

 adopted. The presence of insect pests and fungous diseases and the 

 thoroughness of their control will have their influence on the life of 

 the orchard. Owing to insufficient data, no attempt is made to 

 measure this item of cost. Nevertheless, it should be borne in 

 mind by apple growers. 



SUMMARY. 



In Table VIII all the costs of operation are summarized for both 

 the years specified. On this particular farm these show a total of 

 $1.30 per barrel of marketable apples for 1911 and $1.01 for 1912. 



