EXPENSE FACTORS IN CITY DISTRIBUTION OF PERISHABLES 
33 
Mean retail 
price per 
pound i 
Northern cabbage 
Barreled apples.. 
California oranges 
Cents 
5.20 
7.97 
10.95 
w 
Mean whole- 
sale price 
per pound ' 
Cents 
2.18 
4. 10 
6.48 
r-w 
Mean price 
spread per 
pound 
Cents 
3.02 
3.87 
4.47 
Margin 
Per cent 
i Adjusted for shrinkage in retailing. 
The percentage margin for cabbage is the quotient of 3.02 divided by 5.20. 
The decline in the margin for apples from 58 per cent, the margin for cabbage, 
Tesults from the fact that while r-w for apples is only 1.28 times r-w for cabbage, 
yet r for apples is 1.53 times r for cabbage. The percentage margin for apples 
1 28 
is therefore j~ times 58, which is 49. Similarly for oranges, r-w is only 1.16 
times r-w for apples, while r for oranges is 1.37 times r for apples. Hence the 
margin for oranges shows a decline from the margin for apples, because of the 
difference in these two ratios. It is r^= times 49, which is 41 per cent. 
Thus is demonstrated the simple but important fact that margin variations in 
the series of commodities are synonymous with the varying relation of distribution 
expense per pound to the respective retail price per pound. The statement that 
one article has a lower percentage margin than another is synonymous with the 
statement that the ratio of price spreads per pound is less than the ratio of the 
respective retail prices per pound. The margin is the same for a given commodity 
regardless of the physical quantity of goods considered in computing it. 
INFLUENCE OF A NEW UNIT OF DISTRIBUTION 
In the comparisons and analyses of commodities thus far, the consumer's 
dollar's worth and the pound were the assumed common units of measurement. 
Differences were noted in the expense of distribution per dollar's worth and per 
pound of the various commodities, but no satisfactory explanation of these 
differences has been found. 
Upon reflection, no sound reason exists for expecting either the margin per 
dollar's worth, or the price spread per pound to be uniform. The expense in- 
curred in distribution arises from various services rendered to consumers by 
distribution agencies. If more service is required to retail a dollar's worth or a 
pound of one article than to sell a dollar's worth or a pound of another article, the 
cost of the additional service is logically reflected in a higher retail price. The 
amount of service given by the dealer with each dollar's worth of commodity 
depends to a great extent upon the number of separate sales he must make to 
Teceive a dollar from his customers. This depends in turn upon the average size 
of sale to the individual purchaser. 
Although retail sales of some articles are prevailingly made in larger quantities 
and larger monetary amounts than are sales of other commodities, yet each sale, 
irrespective of size or value, entails an approximately uniform expense for re- 
tailer's service. Apportionment of the service expense on the basis of the dollar's 
worth or the pound ignores the contrasts of different commodities in their service 
requirements. A logical means of comparison should place all commodities on a 
comparable service basis. This is done when the comparisons are made on the 
basis of the individual retail sale. 
HOW RETAIL PRICES ARE SET 
Determination of how retail prices are set is the vital part of this theoretical 
discussion. Here is where the size of sale to the consumer enters into the 
Analysis. 
The size of the retail sale, among the series of commodities, has been shown to 
vary inversely with the retail price per pound, as illustrated in Figure 4. Com- 
modities having low retail price per pound are sold to consumers in lots of several 
pounds at a time, whereas articles with high price per pound are sold in smaller 
lots. The average retail price of northern potatoes was about 4 cents a pound, 
■and the prevailing size of sale was 63^ pounds. Western lettuce, whose retail 
