UNITED STATES DEPARTMENT OF AGRICULTURE

Rural Electrification Administration

**BULLETIN 1767B-2**

**SUBJECT:** **[Work Order Procedure (Electric)]{.underline}**

**TO:** All Electric Borrowers

REA Electric Staff

Borrower Accounting Division

**EFFECTIVE DATE:** Date of Approval

**EXPIRATION DATE:** Seven years from effective date

**OFFICE OF PRIMARY INTEREST:** Borrower Accounting Division

**PREVIOUS INSTRUCTIONS:** This Bulletin replaces REA

Bulletin 184-2, Suggested Work Order Procedure for Electric Borrowers of
the Rural Electrification Administration, issued September 1973.

**FILING INSTRUCTIONS:** File hard copies in the Blue Binder Libraries
under 7 CFR Part 1767. This bulletin is also available on REANET.

**PURPOSE:** To provide a uniform system for accumulating and
distributing work order construction costs.

Wally Beyer 1/18/94

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Administrator Date

**TABLE OF CONTENTS**

1\. General

2\. Data Processing

3\. Construction Activities

4\. Financing Eligibility

5\. Material

6\. Labor

7\. Overhead

8\. Work Orders

9\. Unitization and Classification of Work Order Costs by Record Units
and Primary Plant Accounts

10\. Special Equipment Items

11\. Application of Work Order Procedure to Production Plant

**EXHIBITS:**

A: Stock Record Card

B: Material Charge Ticket

C: Material Credit Ticket

D: Summary of Material Charge and Credit Tickets

E: Material Salvage Ticket

F: Summary of Material Salvage Tickets

G: Materials Register

H: Daily Work Report

I: Individual Employee Monthly Time Summary

J: Monthly Labor Cost Summary

K: Summary and Distribution of Transportation Costs

L: Overheads and Distribution to Work Orders

M: Construction Work Order

N: Retirement Work Order

O: Inventory of Work Orders

P: Staking Sheet-Overhead

Q: Staking Sheet-Underground

R: Tabulation of Record Units-Overhead

S: Tabulation of Record Units for Staking Sheets-Underground

T: Standard Record Unit Cost Sheet

U: Unitization and Distribution to Plant Accounts

V: Summary of Special Equipment Costs

**APPENDICES:**

I Converting Construction Units to Retirement Units

Exhibit A: Table 1: 7.2/12.5 kV Distribution Lines - Overhead

Exhibit B: Table 2: 14.4/24.9 kV Distribution Lines - Overhead

Exhibit C: Table 3: Transmission Lines

II Blanket Work Orders-Work Order Procedure

Exhibit A: Work Order Log

Exhibit B: Staking Sheets for Construction Job Orders

Exhibit C: Maintenance Job Order

Exhibit D: Daily Work Report

Exhibit E: Monthly Labor Cost Summary

Exhibit F: Materials Register

Exhibit G: Overheads and Distribution to Work Orders

Exhibit H: Blanket Construction Work Order

Exhibit I: Blanket Retirement Work Order

Exhibit J: Tabulation of Record Units-Overhead

Exhibit K: Tabulation of Record Units-Underground

Exhibit L: Unitization and Distribution to Plant Accounts

Exhibit M: Inventory of Work Orders

INDEX:

Accounting

Work Order Procedure

**ABBREVIATIONS**

JO Job Order

MO Maintenance Order

OCR Oil Circuit Recloser

REA Rural Electrification Administration

R/W Right-of-way

W/O Work Order

**1.** **GENERAL**: The function of plant accounting is to record the
various elements of construction and retirement costs in a manner that
satisfies the requirements of 7 CFR Part 1767, Accounting Requirements
for REA Electric Borrowers, Subpart B, Uniform System of Accounts, and
to form the basis for recording plant additions and retirements.

**1.1** **[The objectives]{.underline}** of this bulletin are to provide
a sample work order procedure that provides:

**1.1.1** A system of cost controls;

**1.1.2** A method of collecting construction cost data;

**1.1.3** A system of retirement and record units that complies with
Part 1767;

**1.1.4** A method of posting the quantity and cost of record units to
the continuing property records; and

**1.1.5** A system of blanket work orders to record like projects of
small cost and of short duration.

**1.2** Except for REA Form 219, Inventory of Work Orders, the forms
included in this bulletin are offered as recommendations. Any forms that
include the essential data presented on these various recommended forms
may be used.

**2.** **DATA PROCESSING**: This bulletin illustrates a manual work
order procedure. A computerized system may be used provided that the
cost information is drawn from the same original information sources as
would be used under a manual system.

**2.1** The system should provide end cost results that are factual and
from which the three basic cost elements, labor, material, and overhead,
can be readily identified.

**2.2** When assigning work order or job order numbers, the various
types of plant changes should be properly segregated so that they are
properly classified on the REA Form 219, Inventory of Work Orders,
according to REA financing policies.

**3. CONSTRUCTION ACTIVITIES:** For purposes of this bulletin,
construction activities include new construction, system improvements,
or ordinary replacements. For more detailed information concerning these
classifications, refer to 7 CFR

Part 1710, General and Pre-Loan Policies and Procedures Common to
Insured and Guaranteed Electric Loans.

**3.1** **[New construction]{.underline}** is construction in which no
replacements are involved.

**3.2** **[System improvements]{.underline}** are changes or additions
to existing electric plant facilities that, based upon engineering
studies, are necessary and either improve the quality of electric
service or increase the quantity of electric power available to existing
consumers.

**3.2.1** System improvements include replacing retirement units with
larger units and rearranging, resagging, or retiring conductor when the
changes are associated with, and are a necessary part of, a system
improvement.

**3.2.2** Examples of a system improvement are:

**3.2.2.1** The installation of triplex in place of a two-wire service
or the installation of larger conductor in a three-wire service;

**3.2.2.2** The installation of a taller pole to provide the necessary
clearance when conditions change, such as the installation of a pole
that provides the clearance required by the National Electrical Safety
Code when a road is improved;

**3.2.2.3** The replacement of a pole in an existing line to provide the
additional strength required to support a transformer and a service drop
to a new consumer;

**3.2.2.4** The replacement of a given size conductor with conductor of
greater current carrying capacity when the additional capacity is
required;

**3.2.2.5** The conversion of a single-phase line to a three-phase line
to provide service to a new consumer at the end of an existing line.
This change and addition to plant includes retirement, conversion, and
new construction activities. The predominant cost is the governing
factor in determining the amount of cost that REA will finance. Assuming
the line conversion is the costliest part of the project, the project is
classified as a system improvement. For more detailed information refer
to Part 1767.41, Accounting Interpretation,

No. 101;

**3.2.2.6** An increase in substation capacity to provide for added load
growth or voltage change; and

**3.2.2.7** The conversion of single-phase primary line to vee-phase or
three-phase to provide additional capacity, when such capacity is
required.

**3.3** **[Ordinary Replacements]{.underline}** result from wear and
tear, damage, or the relocation of plant facilities. The replacement is
normally

in kind; however, it may involve an improvement or the installation of a
larger item than that being replaced.

**3.3.1** An ordinary replacement involves one or more complete
\"retirement units.\" When it becomes necessary to replace some part of
a unit and the replacement does not result in a substantial change in
the identity or physical character of the item, the replacement is
considered a repair, and is charged to maintenance expense.

**3.3.2** Examples of an ordinary replacement are:

**3.3.2.1** The replacement of a bad pole with a pole of the same class
and height;

**3.3.2.2** The replacement of a bad pole with a pole of a larger class
or height because no pole of similar class or height is immediately
available;

**3.3.2.3** The replacement of a bad pole with a taller pole when
additional ground clearance is not needed;

**3.3.2.4** The replacement of a bad pole with a larger class pole when
the original pole was of sufficient strength;

**3.3.2.5** The replacement of No. 6 copper conductor with No. 4 ASCR or
vice versa, the replacement of similar type conductor when the conductor
has equal or approximately equal capacity, or the replacement of smaller
conductor with larger conductor when the additional capacity is not
required at the time of the replacement;

**3.3.2.6** When serving a new home, the replacement of the pole from
which the service is to be run, when the pole was found to be in very
poor physical condition. In other words, what began as the installation
of a new service now includes the replacement of a pole as well as the
running of a new service;

**3.3.2.7** The relocation of a pole at the consumer\'s request;

**3.3.2.8** The relocation of a pole for a road widening when the pole
is not moved intact (the pole is located on a public road right-of-way).
If the pole is moved intact without any change in assemblies, the cost
is charged to maintenance expense;

**3.3.2.9** The relocation of a line because of poor initial routing.
The change resulted in easier accessibility to the line for inspection
and maintenance purposes. There was no change in the quality of electric
service or the quantity of power available to the consumers;

**3.3.2.10** The relocation of a line because of the relocation of a
building. This relocation did not cause any change in the quality of
electric service or the quantity of power available to the consumer; and

**3.3.2.11** The replacement of an old line in a different location
using like or similar units of property.

**4. FINANCING ELIGIBILITY:** As set forth in Part 1710, the following
formulas are presented to simplify the calculation of the amounts that
may be financed by REA, provided that funds have been established in an
approved loan:

**4.1** **[If the construction is new]{.underline}**, the total
capitalized cost is eligible for financing;

**4.2** **[If the construction constitutes a system
improvement]{.underline}**, the amount eligible for financing is
calculated by adding the total capitalized cost to the cost of removing
the property retired, and deducting the salvage value of the property
retired;

**4.3** **[If the construction constitutes an ordinary
replacement]{.underline}**, the amount eligible for financing is
calculated by deducting the original cost of the property removed from
service from the total capitalized cost of the property constructed; and

**4.4** **[If the activity constitutes a retirement without
replacement]{.underline}**, the salvage value of the property retired is
deducted from the amount otherwise subject to advance for other
construction projects.

**4.5** **[The predominant cost]{.underline}** usually governs the
amount eligible for financing. For example:

**4.5.1** The conversion of a single-phase line to a three-phase line to
furnish service to a new consumer at the end of an existing line
necessitates a retirement, conversion, and new construction. Assuming
the line conversion is the costliest part of this project, it is
classified as a system improvement;

**4.5.2** In serving a new home, the pole from which the service is to
be run is found to be in very poor physical condition and must be
replaced. Assuming the replacement of the pole is the costliest part of
the project, the project is classified as an ordinary replacement; and

**4.5.3** The relocation of a pole at the consumer\'s request when the
pole is not moved intact is classified as an ordinary replacement. The
following comments also apply to the relocation of a pole when the
consumer changed the service entrance. The consumer may pay the borrower
for all or a portion of the costs incurred as required by the
borrower\'s policy. The total payment, less any portion attributable to
maintenance costs, is entered in the \"Contributions in Aid of
Construction\" section at the bottom of the Construction Work Order.
When the REA

Form 219, Inventory of Work Orders, is prepared, only the amount of the
contribution reported in Column 9 that is required to reduce the amount
in Column 10, Loan Funds Subject to Advance by REA, to zero, is
reported.

**5. MATERIAL:**

**5.1** **[General]{.underline}:** Part 1767 establishes Account 154,
Plant Materials and Operating Supples, as the control account for the
purchase and use of materials. Because any one purchase of materials may
contain many different types of items, a subsidiary ledger or stock
record cards should be maintained.

**5.2 [A perpetual inventory system]{.underline}** should be established
to maintain control over materials.

**5.2.1** A perpetual inventory system consists of summary postings to
the general ledger control account and detailed postings to the stock
record cards.

**5.2.1.1** The amounts to be posted are obtained from purchase invoices
and requisitions, or from charge and credit tickets drawn on or to the
material stores for materials withdrawn from or returned to the
warehouse.

**5.2.1.2** Stock record cards are used to record both the quantities
and costs of materials received and issued. Materials purchased are
recorded at actual cost. Materials issued are recorded at average cost.

**5.2.1.3** The total of the balances of the individual stock record
cards should equal the balance in the general ledger control account at
the end of each accounting period.

**5.3** **[To record material costs]{.underline}**, the following seven
basic records should be used:

**5.3.1** A Stock Record Card;

**5.3.2** A Material Charge Ticket;

**5.3.3** A Material Credit Ticket;

**5.3.4** A Summary of Material Charge and Credit Tickets;

**5.3.5** A Material Salvage Ticket;

**5.3.6** A Summary of Material Salvage Tickets; and

**5.3.7** A Materials Register.

**5.3.8** If these forms are used and if the warehouse inventory is kept
at the lowest level consistent with prudent management, the control over
materials is simplified.

**5.4** **[A materials control procedure]{.underline}** is based upon
the use of stock record cards for each item of material; individual
material charge tickets for all materials requisitioned from the
stockroom; credit tickets for all previously issued materials returned
to the stockroom unused; and salvage tickets for all materials retrieved
in connection with retirements.

**5.5** **[A system for controlling costs]{.underline}** envisions the
summarization of materials by item as well as by work order.

**5.5.1** The Summary of Material Charge and Credit Tickets and the
Summary of Material Salvage Tickets are used to summarize materials by
item.

**5.5.2** The Material Charge, Credit, and Salvage tickets should be
prenumbered and filed numerically to form a detailed record of all
materials charged and credited to work orders. If duplicate tickets are
used, the copy is filed by work order to verify the materials issued and
salvaged against the staking sheets.

**5.5.3** A Materials Register is used to summarize material costs by
work order and account. One common register facilitates the
reconciliation process when the general ledger control account does not
agree with the stock record cards.

**5.5.4** Under the procedures outlined in this bulletin, the complete
flow of materials is recorded in one register thereby making individual
postings to the work orders unnecessary.

**5.6** **[Stock Record Card]{.underline}** (Exhibit A): A separate
Stock Record Card is used for each item or group of items for which an
average unit price is maintained. Each card shows the quantity and cost
of material received; the quantity and cost of material issued; and the
quantity, amount, and average cost of material at the end of the month.
The total of the balances shown on all of the individual cards should
equal the balance in the general ledger control account at the end of
the month.

**5.6.1** Exempt items are small, inexpensive items of material, the
costs of which are not accounted for separately but become part of the
cost of certain associated items. These exempt items are shown, by item,
in the same manner as other materials; however, no pricing or extension
of these items is made. The following is a suggested list of items that
may be combined for pricing purposes:

**5.6.1.1** Bolts, Eye

a\. Bolt, angle, thimble type, eye (ba)

b\. Bolt, straight, thimble type, eye (ao)

c\. Bolt, eye, oval (o)

**5.6.1.2** Bolts, Upset

a\. Bolt, single upset (ba)

b\. Bolt, double upset (g)

**5.6.1.3** Bolts, All Other

a\. Bolt, carriage (i)

b\. Bolt, clevis (ef)

c\. Bolt, D. A. (n)

d\. Bolt, machine (c)

e\. Nuts, eye (aa)

**5.6.1.3.1** The cost of locknuts and washers is charged to the card
controlling the cost of \"All Other Bolts.\"

**5.6.1.4** Braces, crossarm (h)

**5.6.1.5** Clamp, anchor rod, bonding (ck)

**5.6.1.6** Clamp, ground rod (aj)

**5.6.1.7** Clip, guy wire (dz)

**5.6.2** Before being placed in stock, all materials received should be
checked against the invoice, the packing slip or the receiving report,
and the purchase order. If no invoice or packing slip accompanies the
material, a receiving report that shows the individual items received
should be prepared. Prices, extensions, and footings on the invoice
should be checked. Discounts, sales or use taxes, and freight charges
should be equitably distributed to the costs of the various items
included on the invoice. The net invoice costs and other charges should
then be posted to the stock record cards.

**5.6.3** Entries for material salvaged and returned to stock as
recorded on the material salvage tickets are posted once each month to
the stock record cards from the Summary of Material Salvage Tickets, and
not from the individual Material Salvage Tickets. Entries for material
withdrawn from and returned to stock are made from the Summary of
Material Charge and Credit Tickets, and not from the individual Material
Charge and Credit Tickets.

**5.6.4** The stock record card is also used as a basis for determining
the average unit price of each item of material.

**5.6.4.1** After all postings to the stock record cards for the month
have been completed, the dollar balance of each card is divided by the
quantity on hand and the result is the average unit cost for the type of
material recorded on the card.

**5.6.4.2** This average unit cost should be rounded off to the nearest
full cent per unit (pound, foot, set, etc.) except for conductor unit
prices which should be carried out to three or more places.

**5.6.4.3** This average unit cost is used to price all Material Charge,
Credit, and Salvage Tickets for the following month. (If, however, a
large shipment, whose cost varies significantly from the average, is
received and withdrawn during the same month received, an adjustment of
the average unit price should be made to offset the distortion).

**5.6.5** To facilitate the pricing of material items during the month,
a Material Price List, using the average costs determined above, should
be prepared from the stock record cards. Columnar sheets should be used
for this purpose. When prices change, the new prices are entered in the
next column. By using a columnar form, it is not necessary to prepare a
new list each month.

**5.6.6** Proper accounting for materials requires the taking of a
periodic, physical inventory (at least once each year) in order to
reconcile the items shown on the stock record cards with the material
items actually in stock. When differences between the two records are
found, the items involved should be reinventoried.

**5.6.6.1** If a difference still remains, the accuracy of the
computations and postings to all of the material records involved should
be rechecked.

**5.6.6.2** If the difference still cannot be located, the stock record
cards should be adjusted to the quantities and amounts determined by the
physical inventory.

**5.6.6.3** An entry, in an amount equal to the net total of all
adjustments, should be made to correct Account 154 in the general
ledger. Minor cost differences (up to two percent of materials issued)
may be charged or credited to Account 163, Stores Expense Undistributed.
Large differences should be charged or credited to Account 186,
Miscellaneous Deferred Charges, or Account 253, Miscellaneous Deferred
Credits, as appropriate, pending further investigation and/or board
action disposing of the difference.

**5.6.7** In addition to the taking of a periodic physical inventory,
test counts should be made of selected material items each month to
determine the accuracy of the stock record cards.

**5.7** **[Material Charge Ticket]{.underline}** (Exhibit B): The
Material Charge Ticket is used to record all withdrawals of material
from stock and should be prepared in duplicate, showing the work or job
order number (or purchaser, in the case of a sale of material).

**5.7.1** The original copy should be signed by the person receiving the
material and forwarded to the office for pricing, extending, and
totaling. After the office copy has been processed, it is posted the
same day to the Summary of Material Charge and Credit Tickets and to the
Materials Register.

**5.7.2** The duplicate copy is retained by the employee issuing the
material.

**5.8** **[Material Credit Ticket]{.underline}** (Exhibit C): The
Material Credit Ticket is used to record ***unused*** material
previously issued to a job that is returned to stock. Salvaged material
should ***not*** be recorded on a Material Credit Ticket.

**5.8.1** The Material Credit Ticket shows the quantities and items of
material returned and the job or work order to be credited.

**5.8.2** Unused materials returned to stock, if reusable, should be
priced at current average stock record card prices.

**5.8.3** Materials that cannot be reused but that have a resale value,
as in the case of scrap copper, should be priced and shown under the
classification \"resale\" at their estimated value.

**5.8.4** Data shown on these tickets is posted daily to the Summary of
Material Charge and Credit Tickets and to the Materials Register.

**5.8.5** The distribution and number of copies should be the same as
for the Material Charge Ticket.

**5.8.6** A different color paper from that used for the Material Charge
Ticket should be used.

**5.9** **[Summary of Material Charge and Credit Tickets]{.underline}**

(Exhibit D): The Summary of Material Charge and Credit Tickets is used
to recap all Material Charge and Credit Tickets.

**5.9.1** The \"Total Amount\" column represents the net amount of
material used each month.

**5.9.2** Unit costs are taken from the individual stock record cards or
Material Price Lists.

**5.9.3** Exhibit D utilizes an item index in accordance with REA
letters of designation and includes spaces for extra items. Credit items
that represent unused materials from previous withdrawals should be
shown in red or identified in some manner so that they are deducted from
the total issued.

**5.9.4** If there is a large volume of tickets, subsummaries should be
attached to the top summary. The total number of each item and the
dollar amount thereof, are posted to the issued section of the
appropriate stock record card.

**5.9.5** The difference between the total amount of the Summary of
Material Charge and Credit Tickets (Exhibit D) and the total amount of
the Summary of Material Salvage Tickets (Exhibit F) should equal the net
of the debits and credits posted to

Account 154 in the Materials Register (Exhibit G). This reconciliation
should be made monthly to ensure the mechanical accuracy of the material
accounting procedures.

**5.10** **[Material Salvage Ticket]{.underline}** (Exhibit E): The
Material Salvage Ticket is used to record all materials salvaged from
retirements that are either usable or that have a resale value.

**5.10.1** The employee responsible for the physical removal of the
material should complete the Material Salvage Ticket, except for the
pricing. The pricing of the reusable and salable items should be
performed by personnel in the office.

**5.10.2** Reusable line materials salvaged from retirements or
maintenance should be priced at current, average stock record card
prices. Large reusable individual items, such as substation
transformers, should be priced at original cost.

**5.10.3** Non-usable, salable material should be shown on a separate
ticket, with details reported on the reverse side.

**5.10.4** Data shown on these tickets is posted daily to the Summary of
Material Salvage Tickets and to the Materials Register.

**5.10.5** A different color paper from that used for Material Charge
Tickets and Material Credit Tickets should be used.

**5.11** **[Summary of Material Salvage Tickets]{.underline}** (Exhibit
F): The Summary of Material Salvage Tickets is used to recap all
reusable, or nonusable but salable, materials salvaged from retirements.

**5.11.1** The \"Total Amount\" column represents the value of all
materials salvaged and should agree with the total credit under Account
108.8, Retirement Work in Progress, in the Materials Register (Exhibit
G).

**5.11.2** The average unit cost for all reusable, mass-type outside
line material should be taken from the stock record cards or Material
Price List for the month. Each item total, both for units and amounts,
should be posted to the received section of the individual stock record
card. The total of the nonusable but salable material salvaged, shown as
the last item on this summary, should be posted to a separate card in
the stock record card group.

**5.12** **[Materials Register]{.underline}** (Exhibit G): The Materials
Register is used to recap all material tickets and to distribute
material costs to the general ledger and the various construction and
retirement work orders.

**5.12.1** The Materials Register should list all material tickets for a
given month in numerical order and should be posted daily.

**5.12.1.1** The total of each Material Charge Ticket is posted as a
credit to Account 154. The debit depends upon the use. If the material
was used in construction activities, the cost is debited to Account
107.2. If the material was used in maintenance activities, the cost is
debited to Account 593 or the appropriate maintenance account in the
miscellaneous columns of the register.

**5.12.1.2** The total of each Material Credit Ticket is posted as a
debit to Account 154 and a credit to the accounts originally charged
when the material was issued.

**5.12.1.3** The total of each Material Salvage Ticket is posted as a
debit to Account 154 and a credit to Account 108.8. If material is
salvaged during maintenance work, the credit is made in red or bracketed
to Account 593 or to the other appropriate maintenance accounts.

**5.12.1.4** Debits or credits to Account 107.2 should be identified in
the section entitled \"Construction Work Orders,\" by job order and work
order number. Entries that relate to the same job or work order should
be summarized at the end of the month.

**5.12.1.5** Credits to Account 108.8 should be identified in the
section entitled \"Retirement Work Orders,\" by job order and work order
number. Entries that relate to the same job or work order should be
summarized at the end of the month. By summarizing all entries relating
to each job or work order, multiple postings to the work orders are
eliminated.

**5.12.2** The net material charged and salvaged each month (the net of
the debits and credits in Account 154) should agree with the total shown
on the Summary of Material Charge and Credit Tickets (Exhibit D), less
the total of all Material Salvage Tickets shown on the Summary of
Material Salvage Tickets (Exhibit F).

**5.12.3** If no material is salvaged through maintenance, the Summary
of Material Salvage Tickets (Exhibit F) for each month should agree with
the total of Account 108.8 on the Materials Register.

**5.12.4** Separate summary forms should be used for material charged
and salvaged in order to preserve control and eliminate mechanical
errors by cross-tying the records. Under this procedure, if a ticket is
posted twice or omitted from the Materials Register, the Summary of
Material Charge Tickets, the Summary of Material Credit Tickets, or the
Summary of Material Salvage Tickets, the totals will not agree. These
records may then be easily cross-checked to locate the omitted or
duplicated items.

**5.12.5** The totals in the account columns of the Materials Register
for Accounts 154, 107.2, 108.8, and 593 should be posted directly to the
general ledger. The charges and credits to the miscellaneous accounts
may be posted individually or recapped at the bottom of the sheet and
posted from that source.

**6. LABOR:**

**6.1 [General]{.underline}**: The procedure for recording labor
utilizes three basic records, a Daily Work Report, an Individual
Employee Monthly Time Summary, and a Monthly Labor Cost Summary.

**6.2** **[Daily Work Report]{.underline}** (Exhibit H): The Daily Work
Report is the basic record for reporting and distributing labor hours to
the various expense accounts or work orders based upon the nature of the
work performed. The work report is prepared daily by the foreman for the
entire crew or by an individual when working alone. Employees\' work
time is listed by hours, with no segregation of overtime, if any, from
regular hours. This segregation is made on the Individual Employee
Monthly Time Summary.

**6.2.1** The Daily Work Report illustrated in Exhibit H includes the
titles and numbers of the expense accounts most commonly charged with
labor costs. Employees should add a brief description of the work
performed; for example, \"Clearing Brush,\" for Account 593. Hours spent
on activities chargeable to accounts that are not included on the
preprinted form are reported in the blank lines following the preprinted
accounts with a description of the work and the applicable account
number.

**6.2.1.1** A brief description of work performed on construction or
retirement work orders is reported in the blank lines together with the
applicable work order number.

**6.2.1.2** Supervisory or engineering payroll hours associated with
construction or retirement activities are charged, as applicable, to
Account 107.2, Construction Work in Progress - Force Account, or Account
108.8, Retirement Work in Progress, and become part of the overhead
costs distributed to work orders.

**6.2.1.3** When supervisory or engineering personnel spend a
significant amount of time on any specific work order, the Daily Work
Report should reflect the work order number. These hours will be
included in the direct labor costs charged to that particular work
order.

**6.2.2** The Daily Work Report is also used to record the number of
miles the borrower\'s trucks are driven for operation, maintenance, and
construction activities. (See Section 7.2 of this bulletin.)

**6.2.2.1** Mileage is allocated to construction, retirement, and
maintenance activities on the basis of usage and judgment. Jobs
requiring the greatest amount of time are typically assigned the
majority of the mileage and bear the greatest portion of the
transportation overhead cost.

**6.2.2.1.1** Mileage associated with expense account activities should
be assigned to specific accounts.

**6.2.2.1.2** Mileage associated with construction and retirement
activities is not identified by specific work order but is charged to
the construction work in progress account or the retirement work in
progress account, as applicable.

**6.2.3** Data reported on the Daily Work Report is posted to the
Individual Employee Monthly Time Summary (labor data) and the Summary
and Distribution of Transportation Costs (mileage data).

**6.3 [Individual Employee Monthly Time Summary]{.underline}** (Exhibit
I): The Individual Employee Monthly Time Summary is used to distribute
labor costs to the appropriate expense accounts and work orders and to
calculate amounts paid to employees, by pay periods. Biweekly pay
periods are illustrated in the exhibit; however, additional columns have
been included to accommodate the use of weekly pay periods.

**6.3.1** The information reported on the Individual Employee Monthly
Time Summary is posted from the Daily Work Reports.

**6.3.2** The day of the week and the date for each day are entered at
the top of the form. Columns on the left and right-hand sides of the
form show the total number of unpaid hours brought forward from the
prior month and those forwarded to the following month, segregated as to
regular and overtime hours. The carry-over of hours for the week that
begins the month and for the week that ends the month is also reported.

**6.3.3** The upper portion of the form provides for the daily
distribution of hours worked during the month to the appropriate expense
accounts and work orders.

**6.3.3.1** Labor cost is distributed to each account or work order by
applying an average hourly rate to the total monthly labor hours
associated with activities chargeable to that account or work order.

**6.3.3.2** This distribution is posted monthly to the Monthly Labor
Cost Summary.

**6.3.4** The lower portion of the form:

**6.3.4.1** Segregates the total weekly hours into regular and overtime
hours;

**6.3.4.2** Summarizes the regular and overtime hours by biweekly pay
periods and applies the appropriate pay rate to determine total pay due
for the pay period; and

**6.3.4.3** Accumulates all regular and overtime hours worked within the
month. This total is used to determine the average hourly pay rate for
the month.

**6.3.4.4** This data is then transferred to the Payroll Register.

**6.3.5** Three headings on the left-hand side of the form summarize the
hours worked for each week:

**6.3.5.1** **[Week Hours]{.underline}** are the total hours worked in a
given week. Week hours are used in determining the number of overtime
hours worked during that week;

**6.3.5.2** **[Hours in Current Month]{.underline}** are the hours
worked during any week (and also the total hours for the month) that are
applicable to the month being summarized. If the month opens or closes
with a partial work week, the total hours worked within that portion of
the week, in the current month, should be reported; and

**6.3.5.3** **[Pay Period Hours]{.underline}** are the total hours
worked during a given pay period. This is an accumulation of the weekly
totals in the pay period. If payrolls are paid weekly, this column is
not necessary. By accumulating the hours in the pay period, the
calculation of each week\'s earnings is avoided, thereby reducing the
number of extensions required to calculate payroll.

**6.3.6** Using the Individual Employee Monthly Time Summary illustrated
in the exhibit provides the following benefits:

**6.3.6.1** Using an average hourly rate for the month eliminates the
problem of distributing the cost of overtime hours to the expense
accounts or work orders. It should be noted, however, that if the
average hourly rate results in an inequitable distribution of overtime
labor or if there are other reasons that support the distribution of
regular and overtime labor separately to the applicable accounts, it is
permissible to do so;

**6.3.6.2** The extensions required to convert hours into amounts are
reduced significantly by accumulating all information for the month on
one form;

**6.3.6.3** Labor costs are properly accrued at the end of each month;

**6.3.6.4** Operating results for a given month or period are not
distorted even though the payroll periods and accounting periods do not
end on the same day;

**6.3.6.5** Only one labor distribution to the expense accounts and work
orders is made each month thereby eliminating the need for a payroll
clearing account; and

**6.3.6.6** The number of postings to work orders and the expense
accounts is significantly reduced.

**6.4** **[Monthly Labor Cost Summary]{.underline}** (Exhibit J): The
Monthly Labor Cost Summary brings together, in one form, the labor costs
for all employees for a given month.

**6.4.1** The information reported on the Monthly Labor Cost Summary is
posted from the \"Amount\" column of the \"Monthly Summary and
Distribution to Accounts\" series of the Individual Employee Monthly
Time Summary (Exhibit I).

**6.4.2** Columns are provided for the operating expense accounts that
are normally charged with labor costs.

**6.4.3** Four columns are provided for work order labor costs.

**6.4.3.1** Two columns apply to Account 107.2, Construction Work in
Progress - Force Account, and two apply to Account 108.8, Retirement
Work in Progress.

**6.4.3.2** All labor costs chargeable directly to construction and
retirement work orders are reported in the columns designated as
\"direct\" under the appropriate balance sheet account.

**6.4.3.3** Labor costs that are chargeable to construction and
retirement activities but are not related to specific work orders are
reported in the column entitled \"Overhead.\" An example of an overhead
labor cost is the salary of the work order clerk who prepares all
construction and retirement work orders. Overhead labor is also known as
indirect labor and is one of the cost elements collected on Exhibit L.
(See Section 7.3 of this bulletin.)

**6.4.4** Extra columns are provided for other accounts, as necessary.
Whenever the entries to an account become too numerous to list in the
\"Miscellaneous\" column, a special column should be assigned to that
account.

**6.4.5** The last page of the Monthly Labor Cost Summary is used to
accumulate, by individual work order, the direct labor costs chargeable
to construction and retirement activities.

**6.4.5.1** These amounts are posted from the Individual Employee
Monthly Time Summaries (Exhibit I). When several individuals work on a
single project covered by a work order, their labor costs are collected
and summarized, by work order, in this register rather than by
individual postings to the various open work orders.

**6.4.5.1.1** By accumulating costs in this manner, direct labor costs
are posted only once each month to the appropriate work orders.

**6.4.5.1.2** Under this procedure, mechanical posting errors are
minimized because the total amounts applicable to the various retirement
and construction work orders must equal the total of the direct labor
columns for Accounts 107.2 and 108.8 on the left-hand side of this form.

**6.4.6** The total of the column entitled \"Total Earnings\" is
credited to Account 242.2, Accrual Payroll.

**6.4.6.1** If gross earnings are debited to this same account when the
payroll checks are issued, the account balance at the end of the month
represents the total accrued, unpaid labor costs.

**6.4.6.2** If vacations are accrued monthly, the necessary data may be
taken from this form.

**6.4.6.3** If workmen\'s compensation and public liability insurance
expenses are based upon total labor costs accrued for a given month,
employees with like rates should be grouped together to calculate these
two insurance costs.

**7. OVERHEAD**

**7.1 [General]{.underline}**: Overhead costs are all costs associated
with construction and retirement activities other than direct material
and labor costs. Direct costs are those that are readily identifiable
and associated with specific jobs or work orders. Indirect or overhead
costs are those costs associated with construction and retirement
activities that are not readily identifiable with specific projects. The
following are examples of items included in the overhead category:

**7.1.1** **[Indirect labor]{.underline}** includes that portion of the
labor costs of the engineer, supervisory personnel, work order clerks,
etc., for services performed in connection with construction and
retirement activities for which charges are not made directly to work
orders;

**7.1.1.1** Indirect labor chargeable to construction and retirement
overhead is based upon Daily Time Report distributions.

**7.1.1.2** If this procedure is impractical, supervisory employees may
conduct time studies to determine the appropriate amount of time devoted
to construction activities. Only those overhead costs that have a
definite relationship to construction may be capitalized. Time studies
should be updated on an annual basis.

**7.1.1.3** Charges to construction based upon arbitrary percentages or
amounts are not permitted.

**7.1.2** **[Engineering]{.underline}** costs include consulting
engineering fees and incidental costs associated with either
construction or retirement activities, such as travel, out-of-pocket
expenses, inspection, etc.;

**7.1.3** **[Transportation]{.underline}** costs include that portion of
Account 184, Clearing Accounts, that is properly chargeable to
construction and retirement activities. The basis for distributing these
costs to construction, retirements, and the operating expense accounts
is the mileage data recorded on the Daily Work Report;

**7.1.4** **[Social Security Taxes]{.underline}** include the
employer\'s portion of the FICA taxes and state and Federal unemployment
taxes that are properly allocable to construction and retirement
activities;

**7.1.5** **[Insurance]{.underline}** includes that portion of public
liability and property damage and workmen\'s compensation insurance
costs that is chargeable to construction and retirement activities. It
does not include insurance costs charged to clearing accounts, such as
automobile insurance and insurance on a storeroom and its contents;

**7.1.6** **[Stores Expense]{.underline}** includes the costs incurred
in the operation of the storeroom that are properly chargeable to
construction activities. These expenses are distributed, on a dollar
basis, to the various accounts charged with materials issued from the
storeroom;

**7.1.7** **[General Office]{.underline}** expenses include expenses
such as stationery, office supplies, forms, etc., that are used to
record and distribute the costs of construction and retirement
activities;

**7.1.8** **[Power Operated Equipment]{.underline}** expenses include
that portion of the costs incurred in operating power operated equipment
that is chargeable to construction and retirement activities. These
costs may be accumulated in Account 184.1, Transportation

Expense - Clearing, or distributed directly to construction,
retirements, operating expenses, or overhead, whichever is more
practical under the circumstances. Amounts recorded in

Account 184.1 are distributed on the basis of usage hours, number of
holes dug, mileage, or other equitable basis, as recorded on the Daily
Work Report;

**7.1.8.1** Exhibit K may be used to distribute power operated equipment
costs by substituting, in the first section, the type of equipment; for
example, hole digger, bulldozer, etc., in place of \"trucks.\" The
number of holes dug, hours operated, or other basis for allocation is
reported in the spaces provided for the daily entries.

**7.1.8.2** If power operated equipment costs are charged directly to
construction work in progress, retirement work in progress, and the
operating expense accounts, the costs applicable to construction and
retirement activities are included as overhead charges on Exhibit L,
Overheads and Distribution to Work Orders Form.

**7.1.9** **[Employee Pensions and Benefits]{.underline}** include that
portion of the borrower\'s share of pension costs, group hospital and
medical costs, etc., that is chargeable to construction and retirement
activities. Amounts charged to the construction and retirement work in
progress accounts should be in the same percentage as the direct and
indirect labor costs charged to the construction and retirement work in
progress accounts are to the total monthly labor costs;

**7.1.10** **[Vacations and Holidays]{.underline}** include that portion
of the monthly accrual for vacations and holidays chargeable to
construction and retirement activities. Amounts charged to the
construction and retirement work in progress accounts should be in the
same percentage as the direct and indirect labor costs charged to the
construction and retirement work in progress accounts are to the total
monthly labor costs; and

**7.1.11** **[Miscellaneous]{.underline}** expenses are those costs
incurred for small, incidental items that are properly chargeable to
construction and retirement activities such as dynamite, fuse caps,
small tools, etc.

**7.1.12** The Summary and Distribution of Transportation Costs (Exhibit
K) and the Overheads and Distribution to Work Orders (Exhibit L) are
used to control overhead costs.

**7.2 [Summary and Distribution of Transportation Costs]{.underline}**

(Exhibit K): The Summary and Distribution of Transportation Costs is
used to control transportation overhead costs. Costs may be distributed
on one of two bases:

**7.2.1** A composite standard truck mileage cost based upon a standard
mileage cost for each of the various sizes of trucks; and

**7.2.1.1** This plan provides for a monthly distribution of
transportation costs by using a standard mileage rate for each truck, or
group of similar trucks, to arrive at a composite rate.

The composite rate is applied to the total miles driven for work
associated with each of the various accounts and work orders.

**7.2.1.2** Nonrecurring expenses, such as large repair bills, are
prorated over a number of months by periodically adjusting the standard
mileage cost.

**7.2.1.3** The costs accumulated in Account 184.1 for a given month
will not exactly equal the total amount distributed to the various
expense accounts or work orders. However, by periodic adjustment of the
standard rates, the balance remaining at the end of the year should be
zero or a very small debit amount.

**7.2.2** A composite truck mileage cost based upon the total monthly
costs recorded in Account 184.1, Transportation

Expense - Clearing.

**7.2.2.1** This plan provides for the use of an average monthly truck
mileage cost determined by dividing the total costs accumulated in
Account 184.1 for any given month by the miles driven in that month.

**7.2.2.2** Nonrecurring expenses are absorbed in a single month.

**7.2.3** The top portion of the Summary and Distribution of
Transportation Costs (Exhibit K) is used to record, by day, the total
miles each truck was driven.

**7.2.3.1** If standard rates are applied, the last two columns are used
to calculate the amount of transportation costs that will be distributed
to accounts in the lower portion of the form.

**7.2.3.2** If average rates are used, the total transportation costs
accumulated in Account 184.1, for any given month, are posted in the
amount column on the right-hand side of the top portion of the form
opposite \"Total Miles and Amount.\" The average rate is determined by
dividing the total transportation cost by the total miles.

**7.2.4** The bottom portion of the form summarizes the miles driven by
the various accounts involved as taken from the Daily Work Report
(Exhibit H).

**7.2.4.1** Only one horizontal column is provided for

Account 107.2, Construction Work in Progress - Force Account, and for
Account 108.8, Retirement Work in Progress. The totals in the amount
column opposite these two accounts become part of the overhead costs
charged to work orders and are classified on Exhibit L, Overheads and
Distribution to Work Orders.

**7.2.4.2** At the end of each month, a journal entry is prepared
charging the expense and work in progress accounts and crediting

Account 184.1, Transportation Expense - Clearing, with the amounts shown
on this form.

**7.3** **[Overheads and Distribution to Work Orders]{.underline}**
(Exhibit L): The Overheads and Distribution to Work Orders is designed
to control the various overhead costs that are applicable to work
orders.

**7.3.1** Overhead costs are determined by analyzing charges and credits
to Accounts 107.2, Construction Work in Progress - Force Account, and
108.8, Retirement Work in Progress.

**7.3.2** In the top portion of the form, the various overhead costs are
totalled separately for each account. This total is then divided by the
total direct labor costs charged to the respective accounts for the
month (inserted on this form opposite \"Total Direct Labor Costs\"), to
produce the overhead rate for each of these two control accounts.

**7.3.3** The bottom portion of the form is used to distribute overhead
costs to the specific construction and retirement work orders on the
basis of the overhead rate computed above. All open work orders for the
month are listed by number. Opposite these work orders, the direct labor
costs applicable to each is posted from the Monthly Labor Cost Summary
(Exhibit J). The overhead rates developed in the top portion of the form
are applied to the direct labor costs to produce the amount of overhead
charged to each work order for the month.

**7.3.4** The total of the two columns entitled \"Direct Labor\" and
\"Overhead\" for construction work orders should exactly equal the total
of these costs shown in the column for Account 107.2 in the top portion.
Similarly, the totals for retirement work orders should exactly equal
those under Account 108.8. It is important that this reconciliation be
made prior to the posting of the overhead on the actual work order
forms.

**7.3.5** Using this form reduces the possibility of error in overhead
distribution and simplifies the process of rechecking, when necessary.
If this form is printed on permanent paper and bound in a register, it
may be used as a posting medium to transfer overhead costs to the
individual construction and retirement work orders (Exhibits M and N).

**8. WORK ORDERS:**

**8.1** **[General]{.underline}**: This section discusses the
preparation of construction and retirement work orders; the method used
to collect the basic construction and retirement costs; and the use of
Work Order Logs, Construction Work Orders (Exhibit M), Retirement Work
Orders (Exhibit N), Blanket Work Orders, and the Inventory of Work
Orders (Exhibit O).

**8.1.1** Because the data required for recording retirements is
different from that used in recording construction, separate work order
forms are used to simplify the procedures and minimize the chance of
errors.

**8.1.1.1** Each work order form is a columnar-type record thereby
eliminating the need for a separate summary of the detailed costs
accumulated on the work order. Each work order form is also designed to
cover a complete construction period rather than a single month.

**8.1.1.2** The individual Material Charge and Credit Tickets and the
individual employee labor costs are not posted to the work order. Only
totals are posted thereby minimizing the potential for mechanical
posting errors.

**8.1.1.3** Overhead costs are calculated on a summary form with only
one posting to each work order for a given month.

**8.1.2** Part 1767 and Section 10 of this bulletin set forth specific
accounting procedures for special equipment items. Costs relating to
these items are, therefore, excluded from both construction and
retirement work orders.

**8.1.3** A system of blanket work orders has been established to
eliminate the need for individual work orders for small, repetitive
projects. This procedure accumulates, in one record, all of the costs
incurred in similar, frequently recurring projects of short duration.

**8.2 [Work Order Log]{.underline}**: The Work Order Log is a control
record in which work orders are assigned numbers and listed in numerical
order. If a blanket work order procedure is used, each job order number
is assigned to a specific blanket work order. As activities associated
with a work order are completed, the dates of completion are entered in
the log.

**8.2.1** The Work Order Log provides the status, at any point in time,
of all incomplete work orders and provides a permanent record of the
dates and other data pertaining to the work performed. The content of
the Work Order Log may be reduced or enlarged to meet the organizational
and control needs of each borrower; however, the following information
is relevant to all borrowers:

**8.2.1.1** The work order number (may include the year, tax district,
or other pertinent information);

**8.2.1.2** The job order number and the related blanket work order;

**8.2.1.3** The individual authorizing the work;

**8.2.1.4** The name of the consumer;

**8.2.1.5** A description of the work to be performed or other
identification;

**8.2.1.6** The estimated cost;

**8.2.1.7** The location of the work;

**8.2.1.8** The date the work began;

**8.2.1.9** The date the work was completed; and

**8.2.1.10** The actual cost.

**8.2.2** Other information of interest to management may include the
dates on which:

**8.2.2.1** Rights of way are secured for plant additions that require
easements;

**8.2.2.2** Staking is completed;

**8.2.2.3** Work orders are posted to the Inventory of Work Orders; and

**8.2.2.4** Staking sheets are posted to the system maps.

**8.2.3** Work orders that have been abandoned should be so noted in the
Work Order Log.

**8.2.4** The Work Order Log should be maintained by the department
responsible for assigning work order numbers and initiating the work.
The log sheets should be filed in chronological order in a permanent
file. For systems having a large number of incomplete work orders in
progress, preparation of a monthly progress report showing the
completion percentage of each work order may be desirable.

**8.3** **[Construction Work Order]{.underline}** (Exhibit M): The
Construction Work Order is used to accumulate, in one record, by month,
all of the costs incurred for a specific work order.

**8.3.1** Part 1767.16, Electric Plant Instructions, paragraph (k),
requires separate work orders for recording dissimilar work order data.
Separate work orders should be prepared for costs incurred by the
borrower for:

**8.3.1.1** The cost of construction performed by the contractor; and

**8.3.1.2** Other construction-related costs incurred by the borrower
but not included in the contract amount.

**8.3.2** The procedures detailed in this bulletin require only one
posting each month for material, labor, and overhead costs.

**8.3.2.1** Material costs charged to each work order are posted from
the Materials Register to the \"Materials\" column of the applicable
work order. To check the accuracy of these postings, a tape of all
material charges shown on the work orders for a given month should be
run and compared to the total in the \"Amount\" column under the heading
\"Construction Work Orders\" in the Materials Register.

**8.3.2.2** Labor costs charged to each work order are posted from the
Monthly Labor Cost Summary to the \"Direct Labor\" column of the
applicable work order.

**8.3.2.3** Overhead costs charged to each work order are posted from
the Distribution to Work Orders form to the \"Overhead\" column of the
applicable work order.

**8.3.3** If the construction project requires special services that are
not considered overhead applicable to all work orders, such costs are
shown separately in the column provided for that purpose. Examples of
such special services include consulting engineering fees and
construction costs resulting from small, contractual agreements.

**8.3.4** If an Estimate Work Order has been prepared for the project,
the estimated cost should be inserted in the space provided at the
bottom of the Construction Work Order.

**8.3.5** The top portion of the Construction Work Order provides three
blocks to designate the type of construction activity being performed.
(See Section 3 of this bulletin.)

**8.3.5.1** When replacements or system improvements involving
retirements are made, the related Retirement Work Order

(Exhibit N) number should be indicated in the space provided.

**8.3.5.2** The Retirement Work Order should be completed and accounted
for on the same Inventory of Work Orders (Exhibit O) as the Construction
Work Order.

**8.4 [Retirement Work Order]{.underline}** (Exhibit N): The Retirement
Work Order is used to accumulate, in one record, by month, all of the
costs incurred for the retirement of plant when such plant is comprised
of retirement units.

**8.4.1** The three cost elements of a retirement work order are:

**8.4.1.1** The original cost of the property retired;

**8.4.1.2** The cost of removing that property from service; and

**8.4.1.3** The salvage value, if any, of the material recovered during
the retirement.

**8.4.2** Cost of removal includes the payroll and related expenses
incurred in cleaning and disassembling the salvaged material. Costs
incurred in reconditioning the materials for use, are charged to
maintenance expense.

**8.4.3** Part 1767.16, Electric Plant Instructions, paragraph (j), sets
forth the accounting for additions and retirements of electric plant.
Paragraph (j) states: \"For the purpose of avoiding undue refinement in
accounting for additions to and retirements and replacements of electric
plant, all property should be considered as consisting of (1) retirement
units and

\(2\) minor items of property.\"

**8.4.3.1** When a retirement unit is replaced, its cost is removed from
the appropriate plant account and the cost of the new item is
capitalized.

**8.4.3.2** When a minor item of property is replaced, the cost of
replacing that item is charged to maintenance expense.

**8.4.3.3** When a minor item of property is retired without
replacement, the cost is credited to the appropriate plant account
unless the cost is credited at a later time when the retirement unit of
which it forms a part, is retired.

**8.4.4** The original cost of property retired is calculated by using
columns three through six on the left-hand side of the Retirement Work
Order. The record units retired and the number thereof are taken from
the applicable staking sheets. The unit price applied to each record
unit is the average historical cost of the individual items as shown in
the continuing property records.

**8.4.5** The grand total of the original cost of property retired is
broken down by primary plant account on the bottom of the Retirement
Work Order. The journal entry recording retirements for the month is a
summary, by account, of the amounts calculated on the individual
Retirement Work Orders.

**8.4.6** The right-hand portion of the Retirement Work Order addresses
cost of removal, salvage, and the net loss due to the retirement.

**8.4.6.1** Three columns entitled \"Direct Labor,\" \"Overhead,\" and
\"Total\" are used to account for the cost of removal.

**8.4.6.1.1** The amounts posted in the \"Direct Labor\" column are
taken from the Monthly Labor Cost Summary (Exhibit J) and represent the
labor, for the month, associated with a particular Retirement Work
Order.

**8.4.6.1.2** The amounts posted in the \"Overhead\" column are taken
from the Overheads and Distribution to Work Orders, (Exhibit L) and
represent the overhead associated with a particular Retirement Work
Order.

**8.4.6.1.3** The \"Total\" column is the sum of the totals of the
\"Direct Labor\" and \"Overhead\" columns.

**8.4.6.2** The amounts posted in the column entitled \"Salvage\" are
taken from the Materials Register (Exhibit G) and represent the total
value of all materials salvaged from a particular Retirement Work Order.

**8.4.6.3** The column entitled \"Net Loss Due to Retirement\" is
calculated by deducting the total of Column 12 from the sum of the
totals of Columns 6 and 11.

**8.4.6.3.1** The net loss is charged to the appropriate subaccount of
Account 108, Accumulated Provision for Depreciation.

**8.4.6.3.2** The journal entry transferring the net loss on retirement
to the appropriate subaccount of Account 108 is the summary of the
totals in the \"net loss\" columns of all Retirement Work Orders closed
during the month.

**8.4.7** To check the accuracy of the postings at the close of the
month, Columns 9, \"Direct Labor;\" 10, \"Overhead;\" and 12,
\"Salvage,\" of the appropriate Retirement Work Orders should be
totalled. These totals should agree, respectively, with the direct labor
charged to Account 108.8 in the Monthly Labor Cost Summary (Exhibit J);
the total overheads associated with Retirement Work Orders shown on the
Overheads and Distribution to Work Orders (Exhibit L), and the total
materials salvaged credited to Account 108.8 in the Materials Register
(Exhibit G).

**8.4.8** It is the borrower\'s responsibility to classify all
Retirement Work Orders in accordance with the definitions set forth in
Section 8.5.8.2. of this bulletin.

**8.4.8.1** The amount subject to REA financing is, in part, dependent
upon this classification.

**8.4.8.2** The top portion of the Retirement Work Order provides three
blocks to designate the type of retirement activity:

**8.4.8.2.1** **[Retirements - No Replacement]{.underline}** represents
plant removed from service with no new facilities constructed;

**8.4.8.2.2** **[Retirement - System Improvement]{.underline}**
represents plant removed from service in conjunction with construction
that is classified as a system improvement; and

**8.4.8.2.3** **[Retirement - Replacements]{.underline}** represents
plant removed from service accompanied by a replacement made necessary
by wear, tear, or damage.

**8.4.9** When a retirement is associated with a replacement or system
improvement, the related Construction Work Order

(Exhibit M) number should be indicated in the space provided.

**8.4.9.1** The Construction Work Order should be completed and
accounted for on the same Inventory of Work Orders

(Exhibit O) as the Retirement Work Order.

**8.5 [Blanket Work Order]{.underline}**: Due to the necessity of
maintaining and improving service to existing consumers and extending
service to new consumers located adjacent to the existing primary lines,
certain types of new construction and replacements of retirement units,
neither involving substantial amounts of money, frequently recur. A
blanket work order is used to accumulate, in one record, all of the
costs incurred in similar, frequently recurring projects. A blanket work
order should be assigned a special identification number according to
the type of construction and retirement activity. All of the items
included on an individual blanket work order should bear the same 740c
code and be of the same construction classification.

**8.5.1** Examples of new construction activities suited to a blanket
construction work order system include:

**8.5.1.1** Service drops;

**8.5.1.2** Installations of secondaries, meter loops, short
single-phase extensions (2 spans or less); and

**8.5.1.3** Changes from 2-wire to 3-wire service.

**8.5.2** Examples of replacement activities suited to a blanket
retirement work order system include:

**8.5.2.1** The replacements of crossarms;

**8.5.2.2** The replacements of cutouts; and

**8.5.2.3** The replacements of lightning arresters, when separately
mounted.

**8.5.3** Costs incurred for these types of activities accumulate on the
same forms as are used for regular work orders.

**8.5.4** In the utility industry, the term \"job order\" relates to
either small construction jobs that are not considered large enough to
require separate work orders or maintenance jobs. The job order should
detail the type of work performed and the location of the work.

**8.5.4.1** Under a system of blanket work orders, job order numbers are
assigned to the individual projects. Small maintenance jobs are referred
to as maintenance orders or M.O.s.

**8.5.4.1.1** A replacement, whether performed under a blanket work
order or a regular work order, often includes a certain amount of
maintenance work, such as the untying and retying of conductor when
replacing a crossarm.

**8.5.4.1.2** The cost of this work, if significant, is charged to the
appropriate maintenance account on the basis of an M.O. For verification
purposes, the M.O. number should, if possible, correspond to the number
of the related Construction Work Order.

**8.5.4.2** Job order costs are not accumulated on any single form since
a job order is merely a directive to perform certain work.

**8.5.4.2.1** The individuals performing the work list, on the Daily
Work Report, the job order number that will be used to summarize the
various job orders by blanket work orders.

**8.5.4.2.2** Materials used and salvaged in connection with each job
and recorded on the appropriate material tickets are identified by job
order and blanket work order.

**8.5.4.2.3** Overheads do not apply to individual job orders but are
associated with the total blanket work order. By identifying all work
recorded on a blanket work order by job order, the direct costs
accumulated on a blanket work order may be reviewed for audit and cost
control purposes, when necessary.

**8.5.4.3** Part 1767 requires the cost of all work orders physically
completed during the month to be cleared to the appropriate plant
accounts. For blanket work orders, this is an undue refinement. Blanket
work orders should be closed and cleared to the plant accounts on a
quarterly basis.

**8.5.5** Borrowers may establish as many blanket work orders as
necessary. In every case, however, all of the job orders on a blanket
work order should relate to the same type of activity. For example, the
replacement of crossarms should not be grouped with the construction to
serve new customers. Job orders should be properly grouped to ensure
that the blanket work order is properly classified on the Inventory of
Work Orders.

**8.6 [Inventory of Work Orders, REA Form 219]{.underline}** (Exhibit
O): The Inventory of Work Orders is designed to accumulate construction
and retirement costs, the net amount of which is the basis for
requesting advances of REA loan funds.

**8.6.1** For interpretations of technical questions relating to the
Inventory of Work Orders, refer to Part 1767 and 7 CFR Part 1721,
Post-Loan Policies and Procedures for Insured Electric Loans, Subpart A,
Advance of Funds.

**8.6.2** **[Minor Construction]{.underline}** is defined in Part 1721
as a project not included in an approved workplan, with total
construction costs (Column 4 of the REA Form 219) of \$25,000 or less.
Minor construction should be reported on a separate Inventory of Work
Orders with a description of each project attached to the Inventory.

**8.6.3** As required by Part 1721, each Inventory of Work Orders must
have the \"Engineer\'s Certification\" signed by the borrower\'s
approved engineer. The Inventory of Work Orders for minor construction
projects must also include one of the following certifications:

**8.6.3.1** We certify that construction reported on the above listed
work orders is a categorical exclusion of a type described in 7 CFR
1794.31 (b) which normally does not require preparation of a Borrower\'s
Environmental Report;

**8.6.3.2** We certify that construction reported on the above listed
work orders is a categorical exclusion of a type that normally requires
a Borrower\'s Environmental Report which will be submitted with a
request for approval of funds to reimburse these work orders; or

**8.6.3.3** We certify that construction reported on the above listed
work orders has been analyzed with respect to a comprehensive service
area environmental map and data base collected and used in preparing the
Borrower\'s Environmental Report for our REA-approved construction
workplan, and that on the basis of that information the minor project(s)
are not located in an environmentally sensitive area or location.

**8.6.3.4** The REA Form 219 contains a signature block for the
certifications in Section 8.6.3.1 and Section 8.6.3.2 of this bulletin.
The certification set forth in Section 8.6.3.3 of this bulletin requires
REA approval before it may be used. If REA approval is obtained, the
certification comments should be inserted on the REA Form 219 by the
borrower.

**8.6.4** Retirement Work Orders reported on the REA Form 219 are for
financing purposes only. Retirement costs reported on the

REA Form 219 include the original cost of the property retired, the
costs incurred in removing the property retired, and the value of the
materials salvaged. Based upon the type of construction involved, one or
more of the cost elements appearing on each Retirement Work Order may be
brought forward to the REA

Form 219 and used in calculating the amount of loan funds subject to
advance by REA.

**8.6.4.1** Salvage reported on the REA Form 219 is the salvage arising
from system improvements and from retirements without replacement.

**8.6.4.2** Salvage arising from ordinary replacements is not reported
on the REA Form 219.

**8.6.5** Funds are advanced to the extent of the total cost of all new
construction and extensions to plant currently in service, provided that
funds have been established in an approved loan. Funds may also be
advanced for the total net cost of system improvements. Only the excess
cost of the replacement over the original cost of the property retired
may be financed for ordinary replacements.

**8.6.6** When advances for construction activities include depreciation
charges on general plant items financed with REA loan funds, a duplicate
advance of funds results to the extent of the depreciation included.
While depreciation expense for general plant items used in the
construction of electric plant (typically motor vehicles) may be a
proper component of construction cost, the amount of depreciation
financed with loan funds should be specifically identified and shown
either monthly or annually as a single item in Column 9 on the REA Form
219 to avoid a duplicate advance of funds.

**8.6.7** The columns in the REA Form 219 are discussed in the order
shown on the form:

**8.6.7.1** The columns entitled, \"740-c Code\" indicate the applicable
740c code (e.g., 100 - new lines; 200 - new tie-lines; 300 - conversion
and line changes, etc.) and the date (year) of the approved work plan;

**8.6.7.2** Column 1, \"Construction,\" includes the numbers of the
Construction Work Orders to be financed;

**8.6.7.3** Column 2, \"Retirement,\" includes the numbers of the
Retirement Work Orders completed during the same month. Each Retirement
Work Order, except those reflecting \"retirements without replacement,\"
should be listed on the same line as the related Construction Work
Order. This permits the mathematical calculation of the net cost of each
particular plant change reported in Column 10;

**8.6.7.4** Column 3, \"Budget Item No.,\" includes the budget purpose
number under which funds may be advanced for each plant change;

**8.6.7.5** Column 4, \"Cost of Construction,\" includes the total cost
of the Construction Work Order. The total cost is taken from the
right-hand column of the individual Construction Work Orders (Exhibit
M). The total of Column 4 should be reconciled to item \"B\" in Column 5
of the Unitization and Distribution to Plant Accounts (Exhibit U);

**8.6.7.6** Column 5, \"Cost of Removal in System Improvements,\"
includes the cost of removing the property retired during construction
classified as a system improvement. Amounts reported in this column are
taken from Column 11 of the Retirement Work Order (Exhibit N);

**8.6.7.7** Column 6, \"Original Cost of Units Retired in Ordinary
Replacements,\" includes the original cost of the property replaced
during construction that is [not]{.underline} classified as a system
improvement. Amounts reported in this column are taken from Column 6 of
the Retirement Work Order (Exhibit N);

**8.6.7.8** Column 7, \"Salvage (System Improvements Only),\" includes
the value of material salvaged from construction classified as a system
improvement. Amounts reported in this column are taken from Column 12 of
the Retirement Work Order (Exhibit N);

**8.6.7.9** Column 8, \"Salvage (Retirements Without Replacement),\"
includes the value of material salvaged from property retired from
service for which no replacement is made. Amounts reported in this
column are taken from Column 12 of the Retirement Work Order (Exhibit
N); and

**8.6.7.10** Column 9, \"Contributions in Aid of Construction and
Previous Approvals,\" includes consumer contributions toward the cost of
extensions to their premises, such other contributions as are made to
reimburse the borrower for costs incurred in accommodating the other
party, and any approvals previously made against work orders listed on
the Inventory of Work Orders. An example of a contribution other than
one for a consumer extension is a payment from the state for a line
move; and

**8.6.7.10.1** The amount of the contribution shown in Column 9 should
not exceed the amount that would otherwise be subject to advance.

**8.6.7.10.2** No amount is entered on the Inventory of Work Orders for
contributions received for lines that will be abandoned and for which no
directly related replacement is made. Instead, such property should be
released from lien, at which time specific accounting treatment is
prescribed.

**8.6.7.10.3** Amounts reported in Column 9 are taken from the
Construction Work Order (Exhibit M). Space is provided on the work order
for indicating, in memorandum form, contributions received for
construction activities.

**8.6.7.11** Column 10, \"Loan Funds Subject to Advance,\" includes the
net amount of the items reported in Columns 4 through 9.

**8.6.7.12** On the bottom of the form, space is provided to summarize
the net amounts by individual 740c code number and budget purpose. The
total of this summary should equal the total in Column 10.

**8.6.8** Transactions relating to the purchase of special equipment,
estimated first installation costs, and the retirement of special
equipment should not be reported on the REA Form 219.

**8.6.9** For instructions on reporting contract construction costs on
the REA Form 219, see REA Bulletin 81-6.

**9.** **UNITIZATION AND CLASSIFICATION OF WORK ORDER COSTS BY RECORD
UNITS AND PRIMARY PLANT ACCOUNTS:**

**9.1 [General]{.underline}**: This section discusses the allocation of
construction costs to record units and the primary plant accounts. To
make this allocation, the various record units completed during the
month should be summarized and a standard cost applied thereto. By
multiplying the number of record units by a standard cost, the average
standard cost for the group is calculated. This average standard cost is
then compared with the actual cost to produce a ratio that is used to
allocate total construction costs to the various record units. The
record units are then summarized by primary plant account.

**9.1.1** REA Bulletin 181-2, Standard List of Retirement Units,
includes an appendix entitled \"Suggested Groupings of Retirement Units
for Purposes of Installing and Maintaining Continuing Property
Records.\" This appendix is intended to aid borrowers in determining the
proper record units to support and account for plant changes on a
continuous basis. This list is for transmission and distribution
property, only. Each borrower must establish its own record units for
generating plants, substations, and office buildings.

**9.2** The following forms are recommended for use in the unitization
process:

**9.2.1** **[Staking Sheet]{.underline}** (Exhibits P and Q): A staking
sheet is an engineering drawing of a construction project that depicts
plant extensions and replacements by construction units. A staking sheet
should be prepared for all force account construction before the actual
work is begun;

**9.2.1.1** If the activity involves only the replacement of a single
record unit such as a crossarm, lightning arrester, or cutout, a staking
sheet is not required. The borrower is only required to prepare a list
of those units replaced to support the construction and retirement work
orders.

**9.2.1.2** Similarly, replacements recorded on a blanket work order do
not require the preparation of staking sheets.

**9.2.1.3** Staking sheets are the basic records supporting physical
plant and are used to update system maps. When staking sheets are
properly maintained, they provide a permanent and continuing record of
all lines installed, including the construction units comprising the
lines and their location.

**9.2.1.4** The staking sheet is so designed that when the front side is
uppermost, the right-hand side of the form can be folded back to make
the first two columns on the reverse side available for summarizing the
construction units added and retired. To the right of the first two
columns, on the reverse side, are the various record units to which the
construction units are converted. The last four columns are provided for
the memorandum entries for meters, transformers, and other special
equipment items discussed in Section 9.2.1.8.1 of this bulletin. Only
those construction units that convert into retirement units should be
listed. This will eliminate listing such construction assemblies as A1s,
A1-2s, A2-3s, down-guys, E units, and J and K units.

**9.2.1.5** If more than one staking sheet is used on the same job,
succeeding sheets should indicate the pole on the preceding sheet from
which the line is extended. The sketch of the general line construction
should be entered in the space provided, indicating poles and pole
numbers at all taps, corners, transformers, and dead-ends. Secondaries,
underbuilds, guys and anchors should also be shown.

**9.2.1.6** The construction units listed on the front of the staking
sheet are converted to record units on the reverse side. Appendix I to
this Bulletin, Tables Converting Construction Units to Retirement Units,
assists borrowers in converting construction units to record units.

**9.2.1.7** When preparing the front side of the staking sheet for
overhead plant, all assemblies in place on the take-off pole (the
starting place for new construction) are listed on the first line
opposite the pole number and are designated as \"existing,\" (EX).
Assemblies removed from service are designated by an asterisk (\*). The
assemblies to be added to the existing pole are shown on the next line
and are designated as \"ADD.\" Replacement assemblies should be
designated as \"ADD\" and circled.

**9.2.1.7.1** Particular care should be taken to differentiate between
secondaries and services. A service drop is defined as wiring from the
last utility-owned pole to the attachment on the consumer\'s premises.
For recordkeeping purposes, service drops are classified as two-wire, or
three-wire and underground services are classified as two-wire,
three-wire, or four-wire, with a further subdivision by wire size. No
consideration is given to the length of the service drop or the
underground service.

**9.2.1.7.1.1** If the borrower owns the pole on which the meter loop is
installed, there is no service drop. The conductor from the transformer
to the pole is considered secondary wire.

**9.2.1.7.1.2** When the meter loop is installed on a building owned by
the consumer, the wiring from the last pole owned by the borrower to the
consumer\'s building is considered a service drop.

**9.2.1.7.2** For a line conversion, the construction assembly being
converted is identified by the prefix \"H\" with the new construction
unit designation shown first and the existing construction unit shown
last; for example, HC1-A1. From an accounting standpoint, a crossarm
unit is being added and two insulators are being charged in with the
conductor unit.

**9.2.1.8** Certain \"G\" and \"M\" construction assemblies for
transformers, OCRs, sectionalizers, and voltage regulators also include
other items of equipment that constitute record units. These \"G\" and
\"M\" units are shown on the front of the staking sheet and are
converted to record units on the reverse side.

**9.2.1.8.1** Meters, transformers, OCRs, regulators, sectionalizers,
and load control switches, as bare equipment items, are listed on the
reverse side only, in memorandum form. This information is not carried
forward to Exhibit U, as these items are capitalized at the time of
purchase.

**9.2.1.8.2** Meters, transformers, OCRs, sectionalizers, and other
special equipment items are often set and reset without other
construction being performed. Each borrower must, therefore, maintain a
system for reporting the movement of these special equipment items
independent of the work order system.

**9.2.1.9** Exhibit Q is an example of a staking sheet for underground
construction. This staking sheet and the symbols for underground
construction are suggested forms only and may be changed to meet a
borrower\'s particular requirements. The information to be inserted in
the vertical columns on the underground construction staking sheet is as
follows:

**9.2.1.9.1** \"[Sta. No.]{.underline}\" Station numbers correspond to
pole numbers on a staking sheet for overhead construction. A station is
any point in a primary cable run where the cable is terminated, tapped,
spliced, fused, switched, or turned to another direction to the extent
that a cable location marker is required. Examples of station points are
riser poles, transformer locations, switch points, or the location of
any other construction unit on or adjacent to the primary cable.
Stations should also be designated at all points where joint trench use
with telephone or other foreign utilities begins or ends;

**9.2.1.9.2** \"[Term. UM2]{.underline}.\" This column includes all
terminations on riser poles. Terminations at transformers or other
equipment are not reported as they are considered a part of that
construction unit;

**9.2.1.9.3** \"[Pri. (back) Run]{.underline}.\" The word \"run\"
corresponds to \"span\" on a staking sheet for overhead construction. It
is the distance between a station and the preceding station. If the
construction is a joint project with a telephone or other foreign
utility in the same trench, a special notation should be made on the
sketch and in the \"Remarks\" column. All crossings of roads, railroads,
pipelines, or communications cables should also be noted on the sketch
and in the \"Remarks\" column;

**9.2.1.9.4** \"[R/W Clearing]{.underline}.\" This column includes the
number of feet of right-of-way clearing between a station and the
preceding station;

**9.2.1.9.5** \"[Line Angle]{.underline}.\" The line angle is the angle,
in degrees, turned at a station. The record should also indicate whether
the turn is to the left or the right. If the turn is made at a location
other than the transformer or other equipment that can be readily
located, it should be marked by a stake or cable marker with an
appropriate entry under the \"Misc. Units\" or \"Remarks\" column;

**9.2.1.9.6** \"[Transformer UG.]{.underline}\" This column includes the
appropriate construction unit designation for transformers;

**9.2.1.9.7** \"[Sect. Assem. UM3]{.underline}.\" This column includes
the appropriate construction unit designation for switches, fuses,
sectionalizers, or other sectionalizing equipment;

**9.2.1.9.8** \"[Grnd, UM2-11]{.underline}.\" This column includes the
number of driven grounds at this station, if any;

**9.2.1.9.9** \"[Pedestal UK.]{.underline}\" This column includes the
pedestals installed adjacent to the primary cable. Off-line pedestals
are reported in the fifth column to the right;

**9.2.1.9.10** \"[Splice]{.underline}.\" The installation of a permanent
buried splice should be noted by a check mark or other indicator in this
column. This location should be considered a station since the exact
location of the splice may be important. \"Take apart\" splices or other
equipment used for sectionalizing primary cable that is housed in
enclosures should be entered is the

\"Sect. Assem. UM3-\" column;

**9.2.1.9.11** \"[Misc. Units]{.underline}.\" This column includes all
construction units not provided for elsewhere. Examples include fault
indicators, cable markers, and warning signs;

**9.2.1.9.12** \"[Secondary Run]{.underline};\"

**9.2.1.9.12.1** \"[Joint With Primary]{.underline}.\" This column
includes the length of secondary cable installed in the same trench as
primary or other cables. The type of other cable should be noted.

**9.2.1.9.12.2** \"[Secondary Only]{.underline}.\" This column includes
the length of secondary cable not installed jointly.

**9.2.1.9.13** \"[Pedestal UK.]{.underline}\" This column includes
pedestals not located along the primary cable;

**9.2.1.9.14** \"[Ser. Run]{.underline}.\" This column includes the
length of the service run. When multiple services take off from a
transformer or pedestal, a separate line on the staking sheet should be
used to record each service;

**9.2.1.9.15** \"[Sec. or Ser. Cable Size]{.underline}.\" This column
includes the size of the secondary or service cable. If the cable is not
three-wire, the number of conductors should also be shown;

**9.2.1.9.16** \"[Size of Meter]{.underline}.\" This column includes the
size of the service entrance, if desired; and

**9.2.1.9.17** \"[Remarks]{.underline}.\" This column includes any
additional information not reported elsewhere. Primary cable sizes other
than the basic size shown at the top of the sheet should be noted.

**9.2.2** **[Conversion Tables]{.underline}**: Appendix I, Tables
Converting Construction Units to Retirement Units, is provided to assist
borrowers in converting construction units to record units;

**9.2.2.1** Appendix I is subdivided according to line voltages; that
is, 7.2 kV distribution, 14.4 kV distribution, and transmission.

**9.2.2.1.1** The construction units associated with 7.2 kV distribution
are those shown in REA Form 804, Specifications and Drawings for
7.2/12.5 kV Line Construction.

**9.2.2.1.2** The construction units associated with 14.4 kV
distribution are those shown in REA Form 803, Description of Units,
Specifications and Drawings for 14.4/24.9 kV Line Construction.

**9.2.2.1.3** The construction units associated with transmission are
those shown in REA Form 805, Electric Transmission Specifications and
Drawings.

**9.2.2.1.4** The construction units associated with underground
electric distribution are those shown in REA Form 806, Specifications
and Drawings for Underground Electric Distribution.

**9.2.2.2** In theory, construction assemblies are converted into
retirement units and then grouped into record units for the unitization
of costs. In practice, the conversion is made directly from the
construction assemblies to the record units.

**9.2.2.3** A vertical listing of the standard construction assembly
units is shown under each voltage classification. The retirement units
and the account numbers to which the construction assembly units are
converted are listed across the top of the table. The number of
retirement units contained in the related construction assembly units is
listed in the body of the table.

**9.2.2.4** The tables have been limited to those items that present a
problem in conversion. For example, poles are not shown in the tables in
the appendix. A pole is a construction unit and a retirement unit.
Therefore, no conversion is necessary, even though the new record unit
includes certain minor items such as neutral supports, pole top pins, J
units, and jumper supports.

**9.2.2.5** The following examples are provided to illustrate the use of
the tables shown in Appendix I of this bulletin:

Construction Record

[Unit]{.underline} [Unit]{.underline}

A1 This assembly does not convert into

a record unit. The pole top pin

and neutral support become part of

the pole unit and the insulators

become part of the conductor unit.

B1 One crossarm, with the neutral

support included in the pole unit.

The insulators become part of the

conductor unit.

C1 One crossarm, with the pole top pin

and neutral support included in the

pole unit. The insulators become

part of the conductor unit.

C3 Three strings of insulators, with

the neutral support included as

part of the pole unit.

E7-2 One 3 down-guy assembly. This

assembly does not convert to a

record unit. However, the anchors

to which these three guys attach

convert to anchor-guy assemblies.

Construction Record

[Unit]{.underline} [Unit]{.underline}

F1-4 One anchor-guy assembly. The guy

included in this assembly is a

down-guy assembly similar to the

E7-2 discussed above.

G210 One crossarm, 2 lightning

arresters, and 2 transformers.

This is an example of a large

construction assembly, one that is

made up of 5 different record

units.

J5 This assembly does not convert into

a record unit. It is similar to

a neutral support and becomes part of the pole unit. All J units

attach to some other unit and are

not, in every case, accounted for

as record units.

K10 This assembly does not convert into

a record unit. It becomes part of

the service drop record unit.

All J units attach to some other

unit and are not, in every case,

accounted for as record units.

M3-25A Two crossarms, 6 strings of insulators, 1 transformer cluster
bracket, 3 lightning arresters, 3 oil circuit reclosers, and 3

recloser bypass switches. This is

an example of one of the larger

units, one that is made up of 18

record units, 2 of which are

crossarms and 6 of which relate to

insulators.

**9.2.3 [Tabulation of Record Units]{.underline}** (Exhibits R and S):
The Tabulation of Record Units is used to tabulate the record units
shown on the reverse side of the individual staking sheets. The record
units used by most borrowers are preprinted on the form, with space
provided to include any other units. The \"Total\" column includes all
record units completed during a given month. The totals are posted to
Column 2 of the Unitization and Distribution to Plant Accounts (Exhibit
U) on which the distribution to accounts is made;

**9.2.4 [Standard Record Unit Cost Sheet]{.underline}** (Exhibit T): The
Standard Record Unit Cost Sheet is used to develop standard costs for
the individual record units. Borrowers should use a system of standard
costs applied to the various record units to unitize the material,
labor, and overhead costs accumulated in a work order; and

**9.2.4.1** The standard cost for a particular record unit is developed
by adding the cost of the material, labor, and overhead typically
required to assemble and install that unit in an electric system.
Standard costs should be based upon past experience and cost records.
Exhibit T is a columnar form showing the three cost elements, the type
of record unit, and the total. The costs developed on this form are
recorded in Column 3 of the Unitization and Distribution to Plant
Accounts.

**9.2.4.1.1** The standard cost record for underground conduit and/or
conductors should include, in addition to the cost of material, labor,
and overhead, the costs of excavation, trenching, and plowing.

**9.2.4.2** Standard costs should be developed, for the first time,
using one of the following plans:

**9.2.4.2.1** [Plan No. 1]{.underline}: Select, from the construction
assembly cost cards (if maintained), an assembly unit that includes the
record unit for which a cost is to be determined. Preferably, not more
than one record unit should be included in the selected construction
assembly. Material costs applicable to the record unit are taken
directly from the assembly cost card. Based upon actual experience and
judgment, a portion of the labor and other costs shown on the standard
assembly cost card are allocated to the record unit. This allocation is
in the same proportion as the record unit cost bears to the total costs
of the assembly. For example, assume you are establishing the standard
cost of a record unit for a crossarm. A C1 construction assembly cost
card should be used. From this card, the total material cost of the
crossarm, braces, carriage bolts, crossarm pins, and other hardware
attached to the crossarm should be grouped and summarized. The amount of
labor and overhead for installing the neutral support, pole top pin, and
insulator should be estimated. If this estimate approximates 20 percent
of the total labor cost for this assembly, 80 percent of the labor and
other costs apply to the crossarm; or

**9.2.4.2.2** [Plan No. 2]{.underline}: The materials typically used in
a given record unit are detailed on Exhibit T and priced on the basis of
current stock record card prices. The average time required to install
the record unit is determined on a man-hour basis. These man-hours are
then priced at the average rate for the type of labor employed. A
percentage, representative of the average overhead for the system, is
applied to this labor cost to determine the standard overhead cost. For
example, assume you are establishing the standard cost of a record unit
for a crossarm. The materials required for the typical crossarm unit
should be listed. If two man-hours are required to install this unit at
an average hourly rate of \$10.00, the total standard labor cost is
\$20.00. If overhead approximates 25 percent of labor, \$5.00 is added
as overhead cost. The total of these three elements is the total
standard cost of a crossarm.

**9.2.4.3** The standard costs established for a common type of anchor
and a common type of guy may be added together to determine the standard
cost for an anchor-guy assembly.

**9.2.4.4** A single cost sheet or card may be used for each record
unit, or record units of similar types may be grouped on one sheet or
card. When estimating material costs for a given record unit; for
example, a crossarm, the average length, size, and class of crossarm
should be estimated, as well as the accessory materials used on the
various types of crossarms.

**9.2.4.4.1** If a system has a large number of alley arms or double-arm
combinations, the extra cost of this hardware should be considered.

**9.2.4.4.2** In determining the material cost for conductor units, the
cost of clipped ends, wrappings, and pin type insulators should be
considered.

**9.2.5 [Unitization and Distribution to Plant Accounts]{.underline}**

(Exhibit U): The Unitization and Distribution to Plant Accounts is used
to allocate the cost of all construction work orders closed in a given
month to the appropriate record units and plant accounts.

**9.2.5.1** Work order costs are distributed to the various record units
on the basis of the standard costs developed on the Standard Record Unit
Cost Sheet (Exhibit T).

**9.2.5.2** The total cost of each record unit, as well as the quantity,
is posted to and becomes part of the continuing property records.

**9.2.5.3** The record unit costs are then summarized by primary plant
account to form the basis for the journal entries transferring the costs
of the completed construction from

Account 107.2, Construction Work in Progress - Force Account.

**9.2.5.4** The process of allocating the total cost of construction to
the various record units is known as \"unitization.\" The work order
costs are taken from Column 4, Cost of Construction, of the REA Form
219, Inventory of Work Orders (Exhibit O). The number of units to which
the standard costs will apply is obtained from the Tabulation of Record
Units (Exhibits R and S).

**9.2.5.4.1** The left-hand column of the Unitization and Distribution
to Plant Accounts identifies the account number of the primary plant
accounts to which the various record units apply. Lightning arresters
and cutouts, which may classified in either Account 365, Overhead
Conductors and Devices, or Account 368, Line Transformers, should be
individually addressed to ensure that costs are transferred to the
proper primary plant account.

**9.2.5.4.2** Column 1, \"Record Unit,\" includes all record units
constructed for a given month. They are posted opposite the primary
plant account to which they are classified in Part 1767.

**9.2.5.4.3** Column 2, \"Number of Units,\" includes the total number
of units taken from the \"Total\" column of the Tabulation of Record
Units. These numbers are posted opposite the applicable record units.

**9.2.5.4.4** Column 3, \"Unit Standard Costs,\" includes the standard
costs taken from the Standard Record Unit Cost Sheet. These costs are
posted opposite the applicable record units.

**9.2.5.4.5** Column 4, \"Total Standard Costs,\" is calculated by
multiplying Column 2 by Column 3. The total of Column 4 appears opposite
item \"A\" at the bottom of the form and is used in calculating the
ratio developed opposite item \"C.\"

**9.2.5.4.6** Column 5, \"Total Actual Costs,\" includes the unitized
cost of the record units shown on the sheet. Before the individual
record unit costs may be determined, an allocation percentage should be
developed. The total of this column,

item \"B,\" is taken from Column 4 of the Inventory of Work Orders
(Exhibit O). Item \"C\" at the bottom of the page is determined by
dividing item \"B\" less the amount in Account 362, by the total
standard cost, item \"A.\" The resulting percentage is then applied to
the individual record units in Column 4 to arrive at the costs included
in Column 5. To check the accuracy of the allocations, the total of the
individual costs included in

Column 5 should agree with item \"B.\"

**9.2.5.4.7** Column 6, \"Adjusted Unit Costs (Gross),\" is calculated
by dividing each record unit cost in Column 5 by the number of units
applicable to that record unit in Column 2.

**9.2.5.4.8** Column 7, \"Contributions in Aid of Construction,\"
includes the amount of non-refundable contributions in aid of
construction. Non-refundable contributions are applied against the
electric plant accounts that gave rise to the contribution. The total
contributions in aid of construction reported in

Item \"D\" should reflect contributions received for only those work
orders that are being unitized and classified on the current form. There
is no definite ratio for applying the contributions. The borrower
determines which class of plant gave rise to the contribution. Usually,
a contribution in aid of construction is received for constructing an
excessive length of utility plant to serve a consumer. In such cases,
Accounts 364 and 365 and/or 367 are credited for the non-refundable
contribution. The distribution of the contribution to the record units
within the plant account is then made on a dollar ratio basis. This
column also provides the basis for the journal entry debiting

Account 107.2 and crediting the plant accounts for the total amount of
the contribution.

**9.2.5.4.9** Column 8, \"Total Net Costs,\" is calculated by deducting
Column 7 from Column 5. The individual amounts reported in this column
and the number of units reported in Column 2 are posted to the
continuing property records.

**9.2.5.4.10** Column 9, \"Adjusted Unit Costs (Net),\" is calculated by
dividing the individual amounts shown in Column 8 by the number of units
applicable to each record unit in Column 2. This column is not totalled
but is useful for comparing gross unit costs to net unit costs.

**10. SPECIAL EQUIPMENT ITEMS**

**10.1** **[General]{.underline}**: The material accounting procedures
discussed in Section 5 of this bulletin relate only to those materials
controlled through Account 154, Plant Materials and Operating Supplies.
This section details the special accounting procedures and recordkeeping
requirements set forth in Part 1767 for the cost of meters, meter
sockets, and other metering equipment recorded in Account 370, Meters;
for line-type transformers and for pole-type and underground voltage
regulators recorded in Account 368, Line Transformers; for load control
switches; and for the conversion of small inadequate transformers.
Equipment installed at substations, such as transformers, voltage
regulators, meters, and current and potential transformers are not
considered \"special equipment.\"

**10.2** **[Accounting Procedures]{.underline}**: Because special
equipment items are continually being moved to accommodate load changes
and maintenance practices, Part 1767 provides different accounting
procedures from those prescribed for other material items.

**10.2.1** The original cost of these items is capitalized at the time
of purchase and is not charged to Account 154.

**10.2.2** The first installation cost, as well as all incidental costs
required to prepare this equipment for use are capitalized upon
purchase.

**10.2.3** All subsequent costs of removing, resetting, changing,
renewing oil, and repairing are charged to maintenance expense. Account
583 is charged for costs associated with transformers, OCRs, voltage
regulators, and sectionalizers and Account 586 is charged for costs
associated with meters, meter sockets, current and potential
transformers, and other metering equipment. If special equipment items
are bought in small quantities,

Accounts 583 and 586 may be credited, immediately upon purchase, for the
amount of the standard installation costs.

**10.2.4** The capitalized cost of special equipment items, including
the first installation, is removed from the electric plant accounts only
when the items are abandoned or retired from the system.

**10.3 [Summary of Special Equipment Costs]{.underline}** (Exhibit V):
The Summary of Special Equipment Costs is used to accumulate, summarize,
and distribute, to the appropriate plant accounts, all costs incurred in
the purchase, handling, testing, tagging, and first installation cost of
all new special equipment items.

**10.3.1** Columns 1 through 4 indicate the quantity, size,
manufacturer, and type of equipment. This information is taken from the
original invoices.

**10.3.2** Column 5, \"Invoice Cost and Freight,\" includes the cost, as
billed by the supplier, of the new equipment items purchased and the
associated freight cost.

**10.3.3** Column 6, \"Labor and Other,\" includes any other incidental
costs incurred in preparing the equipment for use such as handling,
tagging, and stenciling. If these costs are so insignificant that it is
impractical to record them on an actual cost basis, a small allowance
may be added to the estimated cost of installation recorded in Column 8.

**10.3.4** Column 7, \"Transformer Conversion Costs,\" includes the
costs, if any, reported on the reverse side of the form in

Column 10.

**10.3.5** Column 8, \"Estimated Cost of Installation,\" includes the
estimated standard cost of installing the various equipment items.

**10.3.6** Column 9, \"Loan Funds Subject to Advance,\" is calculated by
adding Columns 5, 6, 7, and 8.

**10.3.7** Column 10, \"Salvage Value of Old Transformers,\" includes
the salvage value, if any, reported in Column 6 on the reverse side of
the form.

**10.3.8** Column 11, \"Total Cost Capitalized,\" is calculated by
adding Columns 9 and 10.

**10.3.9** The reverse side of the form is used to summarize all costs
incurred in the conversion of small, inadequate transformers to
transformers of higher ratings.

**10.3.9.1** Columns 1 through 4 indicate the quantity, size of the old
and new transformers, and type. This information is taken from the
original invoices.

**10.3.9.2** Column 5, \"Original Installed Cost,\" includes the book
cost, including the first cost of installation, of the inadequate
transformers being converted to larger capacities.

**10.3.9.3** Column 6, \"Salvage,\" includes the estimated current value
of the case, tank, or any other part that is reusable in the conversion.

**10.3.9.4** Column 7, \"Retirement Loss,\" is calculated by deducting
Column 6 from Column 5. This loss will ultimately be charged to Account
108.6, Accumulated Provision for Depreciation of Distribution Plant.

**10.3.9.5** Column 8, \"Invoice Cost of Conversion and Freight,\"
includes the cost billed by the manufacturer or supplier to convert the
transformers listed on the form, plus freight.

**10.3.9.6** Column 9, \"Other Conversion Costs,\" includes the costs of
handling, tagging, and stenciling incurred in connection with the
conversion.

**10.3.9.7** Column 10, \"Total Conversion Cost,\" is calculated by
adding Columns 8 and 9.

**10.3.9.8** Column 11, \"Total Cost of Converted Transformers,\" is
calculated by adding Columns 6 and 10.

**10.3.9.9** Column 12, \"Converted Unit Cost,\" includes the unit cost
of each type and size of converted transformer and is calculated by
dividing the items in Column 11 by the quantities in Column 1.

**10.4** **[Controlling and Distributing Costs]{.underline}**: Account
107.3, Construction Work in Progress - Special Equipment, is used to
control all costs associated with these equipment items during the time
necessary to purchase, identify, test, and prepare them for actual use
in the system.

**10.4.1** Column 11 on the front side of the Summary of Special
Equipment Costs summarizes the total cost of these equipment items by
primary plant account. The totals of these individual accounts form the
basis for a journal entry transferring the costs accumulated in Account
107.3 to the appropriate electric plant accounts.

**10.4.2** Costs accumulated in Account 107.3 should be transferred to
the plant accounts on a monthly basis.

**10.5** **[Estimating Installation Costs]{.underline}**: Each borrower
should study its cost of setting meters, transformers, oil circuit
reclosers, sectionalizers, and other special equipment items and
determine, at least annually, a standard average cost of installation
for each item. When installation costs vary with the size of the
equipment, separate standard costs should be established for the various
sizes.

**10.5.1** The journal entry required to record estimated installation
costs is a charge to Account 107.3 and a credit to Account 253, Other
Deferred Credits.

**10.5.1.1** That portion of the credit to Account 253 relating to
transformers, OCRs, voltage regulators, and sectionalizers is
transferred to Account 583, Overhead Line Expenses, when the items are
installed on the line.

**10.5.1.2** That portion of the credit to Account 253 relating to
meters, meter sockets, current and potential transformers, and other
metering equipment is transferred to Account 586, Meter Expenses, when
the meters are installed on the system.

**10.5.2** [Retirements of Special Equipment]{.underline}: Special
equipment items that are classified as nonusable should be segregated in
the warehouse. These items should be periodically retired from service
and removed from the plant accounts. The \"Summary of Special Equipment
Costs\" should be retitled as the \"Summary of Special Equipment Costs
Retired\" and used for retiring these items.

**11. APPLICATION OF WORK ORDER PROCEDURE TO PRODUCTION PLANT**

**11.1 [General]{.underline}**: This bulletin applies to all force
account construction performed by a borrower, including construction of
production plant. However, some modification of these procedures is
necessary to conform to REA requirements for production plant financing.

**11.1.1** Section 9, Unitization and Classification of Work Order Costs
by Record Units and Primary Plant Accounts, and Section 10,

Special Equipment Items, of this bulletin do not apply to production
plant.

**11.2 [Material]{.underline}**:

**11.2.1** Many equipment items included in production plant and
installed with force account labor are purchased specifically for a
project.

**11.2.1.1** In such cases, these items may be charged directly to the
appropriate work order and controlled through Account 107.2,
Construction Work in Progress - Force Account.

**11.2.1.2** When the direct method is utilized, these items are not
recorded in Account 154, Plant Materials and Operating Supplies;
consequently, no stock record card is originated.

**11.2.2** When production plant equipment items are replaced, certain
reusable items may be salvaged and held in stock for reuse. A stock
record card or a subsidiary ledger to Account 154 is established for
each of the items. This subsidiary record includes the individual price
of each item.

**11.3 [Construction Work Order]{.underline}** (Exhibit M): The
distribution of costs to the primary accounts is made in accordance with

Part 1767 and is shown on the face of the work order when space is
available. When space is not available, the distribution is made on the
reverse side. This distribution is the basis for the journal entry
transferring costs from Account 107.2, Construction Work in Progress -
Force Account, to the primary plant accounts.

**11.3.1** The only modification necessary to the Construction Work
Order to accommodate production plant construction activities is one
that provides for equipment purchases that are charged directly to the
work order.

**11.3.1.1** Material taken from stock is recorded in the Materials
Register and is posted directly to the work order in the third column,
as discussed in Section 6.4 of this bulletin.

**11.3.1.2** Those materials charged directly to the work order in the
Check Register are posted in the sixth column, \"Special Services.\"

**11.4 [Inventory of Work Orders]{.underline}** (Exhibit O): No
modification of this form is necessary for production plant construction
activities.

**11.4.1** Funds that have been previously approved for advance on
estimate work orders, REA-approved contracts, or purchase orders are
shown in Column 9, \"Contributions in Aid of Construction and Previous
Approvals,\" opposite each work order listed. These previous approvals
are deducted from the gross funds required to determine the amount in
Column 10, \"Loan Funds Subject to Advance.\"

**11.4.2** Below the listing of work orders and their respective costs,
the borrower must provide a breakdown of the amount in Column 9, by work
order, of the funds previously approved for advance on REA-approved
estimated work orders, contracts, and purchase orders.

**11.4.3** Each Inventory of Work Orders submitted to REA must be
accompanied by one set of final (as constructed) drawings, sketches, or
maps, as required, for each work order listed on the inventory. If no
Estimate Work Order was previously submitted to REA, copies of the
individual final work orders must accompany the inventory, together with
any other pertinent data (such as the plans and specifications) that
cannot be shown on the work order itself.

**11.4.4** In those cases in which a work order is self descriptive,
final sketches may not be required even if an Estimate Work Order was
not submitted.

**[APPENDIX I - TABLES CONVERTING CONSTRUCTION UNITS TO
RETIREMENT]{.underline}**

**[UNITS]{.underline}**

**I.1** **[Purpose]{.underline}**: This appendix is provided to assist
borrowers in the conversion of construction units to retirement units.

**I.2** **[Table 1]{.underline}**: Construction Assembly Units shown in
this table relate to 7.2 kV Distribution Lines and are those listed in

REA Forms 804 806.

**I.3** **[Table 2]{.underline}**: Construction Assembly Units shown in
this table relate to 14.4 kV Distribution Lines and are those listed in
REA Form 803.

**I.4** **[Table 3]{.underline}**: Construction Assembly Units shown in
this table relate to Transmission Lines and are those listed in REA

Form 805.

**[APPENDIX II - BLANKET WORK ORDERS - WORK ORDER
PROCEDURE]{.underline}**

**II.1** **[Purpose]{.underline}**: This appendix illustrates the
advantages of a blanket work order procedure, explains its limitations,
and suggests procedures for ensuring that it meets the minimum
accounting requirements of Part 1767. This appendix is not intended to
replace or modify the procedures for blanket work orders previously
discussed in this bulletin.

**II.2** **[General]{.underline}**: The blanket work order is a
specialized work order designed to accumulate the costs of repetitive
types of construction and/or retirement activities, the types and costs
of which indicate that individual costs are not required. A blanket work
order includes like projects of small cost and of short duration.

**II.2.1** For financing purposes, the activities must be similar types
of plant changes. For example, the replacement of a crossarm is usually
an ordinary replacement. However, if the replacement provides greater
strength in anticipation of the installation of a heavier conductor, it
is a system improvement.

**II.2.2** Jobs included in a blanket work order are those that can be
completed within a short period of time or those that are performed at
many different locations within a short period of time.

**II.3** **[Minimum Accounting Requirements]{.underline}**: REA\'s
mortgage requires each borrower to keep proper books, records and
accounts in accordance with the methods and principles set forth in

Part 1767.

**II.3.1** Part 1767.15, General Instructions, requires each utility to
keep its books in a manner that enables the borrower to readily furnish
complete information concerning any item included in any account. Each
entry must be supported by sufficient, detailed information to permit
ready identification, analysis, and verification of all relevant facts.

**II.3.1.1** Part 1767.16 (c) lists and defines the components of
construction cost properly includible in the electric plant accounts.

**II.3.1.2** Part 1767.16 (d) requires all overhead construction costs
to be charged to the appropriate jobs in amounts reasonably applicable
thereto. Supporting records must be maintained to show the nature and
amount of overhead charged to each construction work order or plant
account.

**II.3.1.3** Part 1767.16 (k) requires each utility to record all
construction and retirement activities by means of work orders or job
orders. The work order system must show the nature of each addition or
retirement, its total cost, the source or sources of the costs and the
plant account or accounts to which it was charged or credited.

**II.4** **[Suggested Procedures]{.underline}**: The costs accumulated
in the work order procedure should be controlled to ensure their
propriety as elements of construction or retirement costs. A clear trail
must exist from the charge or credit in the plant accounts back to the
evidence or documentation that supports the existence and valuation of
each transaction. The following suggested methods and procedures are not
intended to be restrictive or all-inclusive:

**II.4.1** The job order is an authorization to perform certain work at
a particular location;

**II.4.1.1** At the time the job order is issued, it is entered in the
Work Order Log (Exhibit II.A), assigned a number, and cross-referenced
to its blanket work order.

**II.4.1.2** Both the job order number and the work order number are
entered on the job order.

**II.4.1.3** The job must agree with the work order description and it
must be of the same type for REA financing.

**II.4.2** A staking sheet must be prepared for each job order;

**II.4.3** The Daily Work Report or time sheet for a blanket work order
must show the job order number as well as that of its related work
order;

**II.4.3.1** Only the work order number is carried to the Employee
Monthly Time Summary and from there to the Monthly Labor Cost Summary.

**II.4.3.2** At the end of the month, only one direct labor charge is
posted to the blanket work order.

**II.4.4** Both the job order number and the work order number should be
recorded on the Material Charge, Credit, or Salvage Tickets and carried
forward to the Materials Register;

**II.4.4.1** At the end of the month, the job orders are summarized by
work order number and posted, in a single amount, to the appropriate
blanket work order.

**II.4.4.2** Job orders do not always relate to blanket work orders; for
example, job orders for maintenance activities or the relocation of
special equipment. These job orders are summarized on a maintenance
order.

**II.4.4.3** The Material Charge, Credit, or Salvage Tickets for job
orders are summarized along with those for work orders on the Summary of
Material Charge and Credit Tickets and the Summary of Material Salvage
Tickets.

**II.4.5** Overhead is distributed to blanket work orders monthly just
as it is for the other work orders;

**II.4.6** A staking sheet with the information suitably revised may be
used to authorize the work (Exhibit II.B). Any information of sufficient
importance to be included on the Work Order Log should be on the job
order;

**II.4.7** The conversion to record units of property is not completed
for job orders in progress at the end of the month. They do not,
therefore, appear on the Tabulation of Record Units or in the \"Number
of Units\" column of the Unitization and Distribution to Plant Accounts.
The costs incurred to date are included in the \"Total Actual Cost\"
column of the Unitization and Distribution to Plant Accounts because
they are included in the blanket work order that is being distributed.
If the jobs are of short duration and slight cost, no material
distortion occurs; and

**II.4.8** The cost of work for which payment or reimbursement is
expected, should be maintained separately even though it may otherwise
be properly included on a blanket work order; for example, the repair of
damages for which payment from an insurance company is expected or work
performed for a consumer who will pay for it. The cost of common types
of construction activities should also be maintained to provide a check
on \"standard costs.\"

**II.5** **[Summary]{.underline}**: To determine the cost of an
individual job order, the material, labor, and overhead costs must be
properly accumulated. Job orders may overlap into the next month. In
this case, the following procedures are applied to the months involved
to determine the actual cost of a job order included in a blanket work
order.

**II.5.1** Material costs are taken from the Materials Register.

**II.5.2** The job order number, work order number, and the month in
which the work was performed are found in the Work Order Log or
Materials Register. The names or numbers of the workmen are taken from
the Daily Work Reports and priced at the average hourly rate for each
workman.

**II.5.3** The overhead rate, taken from the Overheads and Distribution
to Work Orders for the applicable month, is multiplied by the total
direct labor charges to calculate total overhead costs.

**II.5.4** Were it not for the blanket work order procedure, each job
order would become a work order with the additional work of posting,
distributing overhead, and closing.

**II.6 [Suggested Blanket Work Orders]{.underline}**: The number and
kind of blanket work orders required or useful will vary from system to
system. It is extremely important that an exact description of the type
of work to be performed be given. If the same blanket work order number
is used consistently for the same work, personnel will be more aware of
its existence and requirements. The work order should be closed monthly
but the number used continuously. A suffix, such as a, b, c, etc., may
be used to indicate the month. In the examples below, a two-digit number
is used, the first digit of which is the financing code as shown on the
work order log. To distinguish between work orders,

non-blanket work orders may be assigned four-digit numbers.

**II.6.1** The following are common descriptions of the type of work to
be included on certain blanket work orders:

**II.6.1.1** Work Order No. 11 - Security Light, 175 W;

**II.6.1.1.1** If a transformer is installed, the related labor and
material should be recorded on a maintenance order and charged to
Account 583, Overhead Line Expenses. If each type of work is accumulated
separately, installing security lights should be Work Order No. 11 and
installing services from an existing line should be Work Order No. 12.

**II.6.1.1.2** If no more than four poles and/or four spans of conductor
are installed, the costs are included in the job order. If five or more
spans of conductor and/or five or more poles are installed, an
individual (not blanket) work order is used.

**II.6.1.2** Work Order No. 21 - Install Heavier Service; and

**II.6.1.2.1** When an existing service is replaced with one of greater
capacity, this work order is used. The related work order removing the
existing service is 21X.

**II.6.1.2.2** If the construction includes the installation of
conductor other than the service drop, i.e., other than from the last
utility owned pole to the attachment on the premises, an individual (not
blanket) work order is used.

**II.6.1.3** Work Order No. 31 - Replace Pole.

**II.6.1.3.1** When a bad pole is replaced by one of the same class and
size, this work order is used. The related blanket retirement work order
for removing the bad pole is 31X. If a heavier or taller pole is
required and installed, blanket work order 21 - 21X is used.

**II.6.2** The blanket work order numbers in Section II.6.1, are based
upon the following numbering system:

**II.6.2.1** New Construction - Blanket Work Order Nos. 11 - 11X which
include installing security lights, installing services from existing
lines, and installing poles and conductor for a short line extension;

**II.6.2.2** System Improvements - Blanket Work Order Nos. 21 - 21X
which include replacing an existing service with one of greater capacity
or replacing overhead with underground because of excessive outages;

**II.6.2.3** Ordinary Replacement - Blanket Work Order Nos. 31 - 31X
which include replacing a bad pole with one of the same class and size,
replacing crossarms, replacing lightning arresters, and replacing
cutouts; and

**II.6.2.4** Retirement Without Replacement - Blanket Work Order

Nos. 41 - 41X which include retiring idle or abandoned services.

**II.6.3** The following exhibits illustrate the integration of the
blanket work order system with the suggested work order procedure as
established in this bulletin:

**II.6.3.1** A Work Order Log;

**II.6.3.2** B Staking Sheets for Construction Job Orders;

**II.6.3.3** C Maintenance Job Order;

**II.6.3.4** D Daily Work Report;

**II.6.3.5** E Monthly Labor Cost Summary;

**II.6.3.6** F Materials Register;

**II.6.3.7** G Overheads and Distribution to Work Orders;

**II.6.3.8** H Blanket Construction Work Orders;

**II.6.3.9** I Blanket Retirement Work Orders;

**II.6.3.10** J Tabulation of Record Units-Overhead;

**II.6.3.11** K Tabulation of Record Units-Underground;

**II.6.3.12** L Unitization and Distribution to Plant Accounts; and

**II.6.3.13** M Inventory of Work Orders.

**[NOTE:]{.underline} TABLES AND CHARTS AVAILABLE ON HARD COPY**