HIGHWAY COST KEEPING. \) 
small in proportion to the aggregate expenses. Any portion of 
general expense that can be assignable directly to a project should 
be charged against such project. The remainder should be prorated 
over all the project expenditures for the period. 
Engineering and supervision. — To engineering and supervision 
should be charged all expenditures for surveys, plans, specifications, 
estimates, tests, and all engineering inspection and supervision in 
the nature of oversight required to secure the proper execution of 
the work. Such expenditures can be charged directly to individual 
projects. 
FIXED CHARGES. 
Fixed charges are those items of expense which go on practically 
mi changed irrespective of the activities of the organization. Those 
fixed charges which pertain to the production plant have been dis- 
cussed in relation to plant and equipment. Certain fixed charges 
not immediately connected with production operations may best 
be considered as a part of general expense. Thus depreciation, 
interest, taxes, and insurance are elements of expense also in relation 
to the plant and equipment of the administrative organization, such 
as buildings, office and laboratory equipment, instruments, machines, 
and similar items. 
In the practical application of cost keeping, fixed charges are con- 
sidered only in so far as they aid in the determination of efficiency, 
and their inclusion as an item of cost is a question of accounting. 
Where fixed charges result from methods of financing rather than 
the methods of doing the work they belong to the field of bookkeeping 
and not cost keeping. Thus, where a county issues bonds for road 
improvement the interest is a fixed charge which must be paid and 
so increases the total outlay for the improvement but has no relation 
to the efficiency with which the work is executed, and is, therefore, 
a matter of bookkeeping and not cost keeping. Where two crews 
are engaged in excavation, one with power tools and the other with 
hand tools, fixed charges are of prime importance to the cost keeper 
for the purpose of determining efficiency and the cost of operation 
in each case. 
It is customary among contractors to include all fixed charges as a 
part of the expense of work, and therefore they appear in the unit 
prices of their itemized bids. In making up his estimates on unit 
prices to check against submitted bids, the engineer therefore should 
include among other fixed charges interest on capital invested in 
plant and on necessary operating capital, for materials, pay roll, and 
deferred payments. 
Considerations of fixed charges are also important in the select- 
ing of equipment and determining upon types of improvements. 
These considerations are, however, within the field of engineering 
41601°— 18— Bull. 660 2 
