40 BLTJLETIX 1044. U. S. DEPARTMENT OF AGRICULTURE. 
ation of a large-volume business on a small margin of profit with 
rapid turnover. On this basis a lower cost to the consumer would 
be made possible by a saving in operating costs, plus a saving in 
net profits, for the dealer could secure a sufficient return from his 
large volume of business by reduced percentage of net profits. In 
other words, the dealer could get his net income from many small 
profits instead of from a few large profits. 
If this plan of operation is to be followed a closer watch of the 
business must be kept, because any variation in the gross profit ob- 
tained or in the cost of operation would have a relatively greater 
effect on net income. For example, two dealers receive the same 
income from their investment, one doing a business of S3 5. 000 per 
year on the service plan and taking 4 per cent net profit, while the 
other does a business of $70,000 under the self -serve plan and takes 
'2 per cent net profit. If in both cases the gross profits fall 1 per 
cent or the cost of operation increases 1 per cent, measured on net 
sales, the dealer doing twice the business on half the margin would 
lose 50 per cent of his profits, while the other dealer would lose only 
25 per cent of his profits. This is shown in the following tables. 
Percent- 
age of net 
profit. 
Net 
profit. 
Serriceplan 4 $35,000 ; $1,400 
Self-serve 2 70,000 • 1,400 
If gross profits decrease 1 per cent or cost of operation increases 
1 per cent : 
Percent- -^ . Percent- 
age of net Sales. „'«+ a ^e of 
profit. prom toss 
Serriceplan 3 $3-5.000 SI. 050 25 
Self-serve 1 70,000 700 50 
Xo particular accounting system is advised and therefore none 
will be dealt with in detail, except that portion of the ordinary ac- 
counting necessary to obtain the special information desired. The 
obtaining of special information is not essential under the self- 
service plan, because of the self-service aspects, but on the contrary 
is desirable under any method of business. The matter is mentioned 
here only because of the particular significance of such informa- 
tion in connection with operation on a small margin of profit. 
CLASSIFICATION OF EXPENSES. 
In every business, no matter how small or of what nature, suffi- 
cient records should be kept >o that the net profit or loss can be de- 
