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Show till COS! OF TRUGK OPERATION iers' Should Consider yd Charges and De-, De-, precision Accounts. j 1 iiing Power Measured i by Ability to Provide I? Sinking Fund. . . i s:nt,s is simplr UnS commodi-V!!w'viff commodi-V!!w'viff for more than thoy cost, 'fundamental axiom follows that f., from business must be fomuled knoirledgo of costs. If a vendor r0t know his costs he is unable Xmiue whether his business is or losing, and the appalling peris per-is of business failures in recent ! testifies to the regrettable dearth I borate cost data in all lines of en- oaman operates a motor truck engages in the transportation ,s whether he sells the services tracks to others or converts them ,,ses of his own business. Just B-ould be competing with others S' tilir trade if he hired them out, is competing with those of whom '' lit 'eIlt service when he operates , 7or jjmself. The success of any krial pursuit is always largely a . of competition. toot data on what the operation i trucks costs him a man is at a titive disadvantage. He does not whether he is saving money by line his own trucks or not. He t tell whether bis equipment is lost economical for his purposes . erwise. He has no means of know- better he is getting the best re-:. re-:. rem his rolling stock or whether are needless leaks which only re-the re-the proof of- excessive operating j point them out, where otherwise 'i roold be unsuspected. rse, infinitely, than no cost fig-it fig-it all are incorrect ones, for witn- ! bt knowledge of costs ordinary n would impel a conservative and ni attitude. Bogus costs encour-riee-cutting and all the attending One reason for the disquieting , i of failures in the trucking, in-f in-f haulage and motor bus fields it the price-slashing of cost-igno-" iperators not only forces them into nptcy, but renders sound competi-y competi-y others who operate intelligently lit, if not indeed impossible. Accounting. fallacies of many self-deceiving tors are based chiefly upon failure ko all of the items of cost into leration. Too many truck users id upon their check books for their (ting accounts and intentionally or T rimtionally water their stock or i their investment dry by failing raarpe a suitable sinking fund nst the cost of operation; by consid- only current operating expenses : failing to allow for disbursements " tin to become necessary in the fu- jef among the omissions of this na-r na-r are those fixed charges, which, ' ;h intangible and largely unaff ect-y. ect-y. 7 the extent to which the vehicle "Krated, go on just the same and ' ie chief reason why a minute of time here, an hour or two a day : day or so a month make the dif-r- m between economy and extrava- iea a sum of money is paid out . le purchase of equipment of any ..the transaction is one of slow turn- ; and is termed an investment. A . investment is never a permanent -jiditure, but merely a way of put-money put-money to work m order that it increase' itself. Money, however use, should return a minimum of :eRal rate of interest, since it may i' be invested in gilt-edged secur-ito secur-ito earn this amount. fm, is the first fixed charge, p 6 per cent on the total invest- jee all machinery wears out in time, re'bslete, and can never be Si n,' lts real value deprecia- would be allowed for or else some 1 "wrung the owner will find that I foment has vanished. To allow a depreciation charge is made, so as to build up a sinking fund from the earnings of the truck by which it may be replaced when worn out. This process of self -maintenance of the investment in-vestment is called amortization and is based on an estimate of the useful life of the truck, so that a fund sufficient to pay for a new truck will have accumulated ac-cumulated by means of monthly or yearly allotment. Amortization Charges. Amortization is figured either on an annual percentage basis or on a fixed sum per mile of travel. Tho first is based on an estimate of the life of the truck in years and is, of course, the simplest. The second assumes a given number of miles of travel, irrespective of time, as the life. The latter is the more exact, since a truck which is run 18,000 miles a year may be expected to last twice as long as one which runs 36,000 miles per annum. It is also a better guide to costs over short periods, since it apportions the depreciation deprecia-tion charge more equitably in months where greater or less mileage than the average is made. Just as amortization is necessary to provide for the natural depreciation in value due to ordinary use of the truck, so insurance is necessary to prevent loss from unforeseen misfortunes, such as fire, collision, theft, claims for property prop-erty damage and liability. The premiums pre-miums for these different policies are an essential charge against the cost of operation, whether the policies are actually actu-ally held or not, for if a firm prefers not to insure, the risk is there notwithstanding, notwith-standing, and in sound financo a risk is always a cost, and over a period of years one cannot expect to remain immune im-mune from losses of this kind, so that from experience we learn what the average aver-age losses will amount to if apportioned through the life of the investment as thev should be. faxes and licenses must also be charged on the cost account, as these are expenditures necessary to the lawful law-ful operation of the truck and would not be incurred were the truck not in service. Incidental Expenditures. Garage rental, light and heat are also proper charges against the truck, apportioned, ap-portioned, of course, according to the amount of space required by each vehicle. ve-hicle. Many firms maintaining their own garages fail to make this charge on tho plea that the garage is paid for, or that it is necessary to the plant, any-wav, any-wav, or any one of a number of other reasons, ail besido the point, which is that it is costing the firm money, directly di-rectly or indirectly, to garage the truck, and that this represents part of the cost of the service the truck renders. It is important to include this item, as all others, because unless it is included a true cost.canuot be found and therefore there-fore an intelligent and accurato comparison com-parison with costs by other methods or as between different vehicles cannot be made. Tires present a subject w-nich has been much argued. Since they are the most rapidlv depreciating portion ot tho vehicle, it is general practice to depreciate de-preciate them separately on a mileage basis, considering this depreciation as a per mile operating cost. Cost accountants account-ants object to this, though, pointing out that as thev are a part of the original investment "and must be replaced upon discarding the chassis for a new one, they are a part of the fixed investment and" should be charged with interest and depreciation the same as the rest of the chassis. No two portions of the chassis depreciate at exactly the samo rate, and so, strictly sneaking, if tins principle prin-ciple were carried out it w;ould be necessary to amortizo each piece and part of the chassis at a different rate, which would involve a staggering amount of work to no useful end. Mary operotors. therefore, include tire cost in the princiixil and then make a per mile charge for tire maintenance and replacement as a running charge. |