June, 1954]
O.
P.
AGARWALA
121
Equipment depreciation is calculated by the conventional method of each year
charging a fixed percentage of the initial cost of the machine or utensil to the opera-
tions for which it is employed. One-twelfth of this annual figure is charged here
each month. This cost is distributed to products according to which ones and. how
many of each, are involved in the operation of the machine or the use of the utensil.
Repair charges are distributed according to the products handled in or by use
of the machine or utensil involved.
Miscellaneous expenses cover the cost of such items as postage, stationery,
freight and octroi. These items are charged to the process or products in or for
which they are used.
Miscellaneous supplies include such things as parchment paper, sugar, salt,
butter colour, rennet, vanilla, extract, etc. These items are purchased by the Dairy
through the Institute Purchasing Officer. For the most part they are purchased at
regular retail rates, although trade discounts are obtained at times because of the
quantity involved. These items are charged as consumed, that is, to the products
in whose handling and/or processing they are consumed.
Wages are admittedly the most difficult of the expense items to distribute. The
distribution of supervisory wages is made by ascertaining monthly from the Dairy
Manager what portion of the supervisor's time he considers they gave to each specific
product or operation during the period involved. The portions of the supervisors'
time determined are used as that portion of their salaries which are charged in each
case. This has been found to be the simplest method of distributing these expense
items, consistent with the highest possible degree of accuracy.
Plant wages are distributed according to the following method:—
(i) Observations are made weekly during the month and the man-hours utilized
in the different operations or on the different products in the creamery for a full day,
specially washing in the wash room and creamery, making butter, preparing butter
for sale, making dahi, ice cream and other products, pasteurizing milk, cream, ice
cream mix, etc., are determined.
(ii) The number of man-hours for which salaries are paid during the month
is calculated, including those workers on leave but who have been paid. (a) In
the case of a worker on leave, the number of man-hours which he shall be assumed
to have worked per day will equal the average number of hours worked per man-day
by those workers on duty; (b) In cases in which on the day of observation one or
more men are absent without reason and without pay, no observation will of course
be made on such missed time and no pay will be given for such missed time, hence
this time shall be omitted when calculating the distribution of time.
(iii) Using the observations in (i), that percentage of the total man-hours in
(ii) to be charged directly to each operation or products calculated.
(iv) The man-hours on each product operation, except raw milk and miscel-
laneous, are added. The percentages of this total represented by (a) butter manu-
facture, (b) butter sales (c) ice, are then expressed. The man-hours for raw milk plus
miscellaneous are multiplied by the figure obtained under (a), (b) and (c) and the
product in each case is added to the man-hours for butter manufacture, butter sales
and ice obtained under (i).