2 BULLETIN 1421, U. S. DEPARTMENT OF AGRICULTURE 
A METHOD OF ESTIMATING COSTS 
The hours of labor and the quantities of materials used in the 
production of an acre of each of the seven crops, averaged for the 
three years, 1919-1921, are shown in Table 63. The amounts paid 
out for contract labor and job labor were converted into their labor 
equivalents by using 45 cents per hour for man labor and 20 cents per 
hour for horse labor in 1919 and 1920 and by using 30 cents per hour 
for man labor and 12.5 cents per hour for horse labor in 1921. The 
hours of labor thus obtained for the contract and job labor plus the 
hours of labor shown in Table 44 equal the total hours of direct labor 
presented in Table 63. | 
Table 63 also shows for each crop what percentage the combined 
cost of labor and materials is of the total operating cost, and what 
percentage interest on real estate per acre is of the total interest charge. 
By applying current prices to the quantities of labor and material 
shown in this table, the operating cost of producing an acre of each 
of the crops may be estimated very closely for any given year. The 
interest charge may be computed in the same way by deciding upon 
the value of real estate per acre and the rate of interest to be allowed. 
TABLE 63.—Three-year average hours of labor and quantities of materials used per 
acre in the production of designated crops, 1919-1921 
Red- | Alsike- 
Item Wheat ae eueat Toe Beans | clover | clover 
seed seed 
Direct labor per acre: ! 
IY Beha I OYoVES laKoybieos ke ee a Dot: 30. 8 131.6 101. 4 SYED, 24.9 21.7 
Horse labor, hours saee== sees 44,3 32:0) |e Gul, 1OOV2 a eo eet 22.6 15.1 
Material per acre: 
SOG pa bee es 2 aetna ners pounds__| 101.0 10. 4 15.8 | 983 65. 7 8. 60 6. 50 
A Digit ole eee ses Sk Sere ou ae eee ee ea doz Dries |e ees | eae eer ie . 07 . 02 BOS 
Sa CkKGs< Sasa ees eee ss es eee number__ EG fet eee ee eres 141 2. 90 2. 00 2. 90 
1b (| eee td ee ire hee ey AS oh tons__ SOA we So. SE ed | eee 05 07 07 
INTam UG Sma eae ee kee es ah eee loads_- ' 6:33) eeeee 4.9 .6 133" | 22S eee 
Errigation= water 2" 3. 2.058 eee iS a] ee ae, ieee | ee | 
Total operating expense represented by labor 
and materials at current rates____- per cent__ 60 65 78 78 64 55 50 
Total interest charge represented by interest 
on real estate per acre_______-__-_- per cent__ 95 97 92 91 94 97 98 
1 As here used direct labor includes contract labor, whereas in Table 2 contract labor is expressed in dollars. 
* To the value of the materials listed at current rates for the year in question add the cost of water per 
acre. ‘The cost of water per acre equals the total cost of water per farm divided by the acres irrigated. 
Suppose, for example, that the hours of man and horse labor and 
the quantities of materials given in Table 63 for producing an acre ot 
wheat when charged at current rates amount to $18 per acre for some 
given year. Since Table 63 shows this to be 60 per cent of the total 
operating expense, the total operating expense would be $30 per acre. 
Suppose further that the value of the land on which the wheat is 
erown is $200 per acre and that the interest rate is 7 per cent. The 
interest charge per acre for the use of real estate would then be $14. | 
Since this is 95 per cent of the total interest charge, the total would 
be $14.75 per acre. The total cost of producing an acre of wheat for 
the year in question would then equal $30 (the operating cost), plus 
$14.75 (the interest charge), or $44.75. This amount, less the value 
of the crop credits (the value of the straw and pasture of the stubble 
field), should give the net cost per acre about as closely as it is pos- 
sible to estimate costs in advance. 
pP=guee Pe ee A. 
