178 MISC. PUBLICATION 5 4 0, U. S. DEPT. OF AGRICULTURE 



Figure 75 shows roughly the value of equipment that can be pur- 

 chased and operated with specified amounts saved in labor costs. The 

 following assumptions have been made: Interest and taxes, 10 per- 

 cent per year ; repairs and maintenance, 10 percent per year for 1-year 

 and 2-year write-offs, 15 percent per year for 5-year, and 20 percent 

 per year for a 10-year write-off; hourly operating cost per $1,000 of 

 investment, 10 cents ; number of hours operated per year, 24 hours per 

 day, 200 days per year. A decrease in labor costs of only $1 per hour 

 will pay the operating and capital charges on equipment conserva- 

 tively estimated as costing $4,000 to $5,000 with a 5-year write-off. 



A uniform flow of product along the preparation line is essential for 

 most economical operation. An even flow requires fewer employees 

 and smaller equipment than does an irregular or spasmodic flow. 

 Losses caused by temporary shut-downs are often large. Most items 

 of cost continue during shut-downs, with the exception of those for 



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 LABOR COST (DOLLARS PER HOUR) 



Figure 75. — Equipment investment justified by savings in labor costs. 



raw material and packaging supplies not used and a small amount for 

 utilities. It may not be practical to save labor costs by dismissing the 

 help, because it is usually impossible to anticipate the length of a 

 shut-down. 



The amount of loss due to a shut-down may be roughly estimated 

 by assuming that the sale value of the lost production less the cost 

 of materials saved (raw material and containers) is an actual loss. 

 For example, a shut-down of the preparation line, due to a shortage 

 of raw material, results in a loss of 20 cents for each pound of lost 

 production if the selling price of the product is 35 cents per pound 

 and the combined raw-material and container costs are 15 cents per 

 pound. This amounts to $100 per hour in a plant which normally 

 turns out 500 pounds of finished product per hour. 



Careful treatment of the raw product through all stages of prepara- 

 tion reduces the processing cost per dry pound by increasing yields. 

 The two steps in preparation that offer the best opportunity for 

 decreasing material losses are peeling and trimming. 



