HIGHWAY COST KEEPING. 3 
For example, the cost of men using picks and shovels on excavation 
who are directly expending their efforts on that piece of work is a 
direct labor charge. A superintendent in charge of a road job is not 
directly expending labor on excavation, but is engaged in directing 
the prosecution of all kinds of work and his expense is an indirect 
labor charge, chargeable pro rata against the production of all the 
work units he may be supervising. Other examples of indirect labor 
are the services of watchmen, timekeepers, and water boys. 
MATERIALS. 
Materials also are divided into two similar classes — direct and indi- 
rect. All materials entering the product as an integral part of its com- 
position are called direct materials. All materials chargeable against 
the production but which do not enter directly into the product 
as an integral part of it are called indirect or expense materials or 
sometimes supplies. The cement, stone, and sand that are mixed 
together to form the concrete of which a concrete road is constructed 
are all direct materials, but the oil used for lubricating and the gaso- 
line for operating the mixer hi which these materials are prepared 
for use are indirect materials or supplies. It is easy to charge 
direct material cost, but often it is very difficult to charge to each 
product its correct share of indirect material cost. 
Small, or hand, tools not used as a part of some plant unit and 
which have such a short period of usefulness that they are seldom 
used on more than one job, usually are considered supplies and 
therefore are part of the indirect materials charged to the work. 
PLANT AND EQUIPMENT. 
"Plant" includes such physical property used on the work as 
land, structures, machinery, live stock, and tools of a more perma- 
nent character than those referred to as supplies. " Equipment" 
is a less inclusive term and is interpreted generally to mean the 
smaller and especially the movable plant units. The cost of the 
service of "plant" can be charged most readily in the form of a 
daily rental against the work upon which it is used. This rental 
should be charged whether the equipment be owned by the operat- 
ing organization or leased from other owners. It consists of "operat- 
ing charges," which are — 
(a) The expense of operation, 
(b) The average cost of repairs, 
(c) Charges for the time spent in idleness, 
and "fixed charges," which are — - 
(d) Charges for depreciation, 
(e) Interest, 
(f) Taxes, 
(g) Insurance. 
