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EXPERIMENT  STATION  LIBRARY 


Bulletin  251 


July,    1930 


NEW  HAMPSHIRE  AGRICULTURAL 
EXPERIMENT  STATION 


OPERATING  COSTS 

OF  RETAIL  GRAIN  STORES 

IN  NEW  HAMPSHIRE 


UNH  LIBRARY 


3  4bDD  DDblfi  ^771 


By  E.  H.  RINEAR 


'.f  ' 


UNIVERSITY  OF  NEW  HAMPSHIRE 
DURHAM,  N.  H. 


[•: 


-'0,^6 1'  SUMMARY 

A  survey  was  made  of  practically  all  the  retail  stores  in  New  Hamp- 
shire which  were  selling  feed  and  grain  during  1926.  Reports  were 
collected  from  197  stores.  Following  this,  detailed  accounts  were  ob- 
tained from  41  stores  for  the  business  transacted  during  1928. 

The  state  survey  sliowed  15  per  cent  of  the  feed  and  grain  sold  at 
the  car  door,  62%  at  the  store  and  23%  delivered  to  customers.  The 
average  gross  margin  was  $4.71  per  ton  for  138  stores  and  11.29% 
of  sales  for  33  stores.     (Table  1). 

The  business  of  the  41  gi-ain  stores  amounted  to  $4,539,018.  during 
1928  and  was  transacted  on  a  gross  margin  of  11.22%  of  sales.  The 
total  costs  were  10.76%,  a  net  profit  of  .46%  of  sales.  Total  costs 
were  proportioned  under  four  heads  as  follows:  fixed  costs  24.63%, 
labor  costs  51.70%,  delivery  costs  8.63%,    and    other    costs    15.04%. 

The  average  investment  turnover  in  relation  to  sales  was  4.04  times. 
As  the  number  of  turnovers  increase  an  average  of  l^o  times  fixed 
costs  decreased  $.02  per  dollar  of  sales.     (Table  6). 

The  number  of  employees  per  store  averaged  3.7  persons.  As  year- 
ly sales  per  man  increased  from  less  than  $20,000  to  $60,000,  labor 
costs  decreased  $.023,  total  costs  $.061  and  gross  margins  $.043  per 
dollar  of  sales.     (Table  10). 

It  was  found  in  five  stores  that  the  employees  were  busy  82.9%  of 
the  total  time  during  one  week.  Sales  per  hour  of  occupied  time  for 
all  stores  varied  from  $8.06  to  $20.04  with  an  average  of  $10.52.  The 
ones  operated  by  one  man  had  a  higher  average  sales  per  hour  of 
occupied  time  than  those  operated  by  3  or  more  people.     (Table  11). 

The  average  inventory  turnover  was  10.2  times.  As  the  number  of 
turnovers  increased  an  average  of  3  times,  total  costs  decreased  $.017 
per  dollar  of  sales. 

An  average  of  $870,521.  was  carried  in  accounts  and  notes  receiv- 
able by  89  of  the  grain  stores  in  the  state.  The  average  turnover  of 
accounts  receivable  was  38  days.  Bad  debts  ranged  from  none  up  to 
$4000.  per  store. 

When  weekly  retail  cash  store  prices  are  compared  for  62  stores 
for  grain  and  feeds  of  the  same  standard  or  brand,  a  great  range  in 
prices  is  found.  The  largest  range  is  $.65  per  cwt.  for  wheat  and  the 
smallest  $.30  per  c\\i.  for  middlings.     (Table  19). 

Although  the  Boston  wholesale  market  changed  40  times  on  a  week- 
ly basis  during  the  year,  the  stores  shifted  prices  14.5  times.  Store 
prices  lagged  an  average  of  2.6  weeks  as  upward  market  changes  oc- 
curred and  4.8  weeks  when  they  were  downward. 

Higher  retail  cash  prices  are  charged  for  corn  as  the  percentage  of 
credit  sales  increase.     (Table  21). 


operating  Costs  of  Retail  Grain  Stores 
in  New  Hampshire 

By  E.  H.  RixEAR 


The  economical  distribution  of  grain  is  of  great  importance  to  both 
farmers  and  dealers  in  New  Hampshire.  The  farmers  spend  seven  or 
eight  million  dollars  a  year  for  feed,  according  to  agricultural  census 
reports,  and  individual  accounts  show  the  grain  bill  constitutes  from 
30  to  50  per  cent  of  total  farm  expenditures.  The  dealers  have  large 
amounts  of  capital  invested  in  warehouses,  equipment,  stock  inven- 
tories and  accounts  receivable  and  are  interestecl  in  securing  a  fair 
return  for  their  capital  and  labor. 

Similar  studies*  elsewhere  have  shown  a  wide  range  in  the  operat- 
ing costs  of  grain  stores,  and  it  seemed  desirable  to  investigate  the 
situation  in  this  state.  The  main  objects  of  the  study  were:  first,  to 
analyze  the  costs  of  New  Hampshire  grain  stores;  second,  to  set  up 
operating  ratios  of  efficiency;  and  third,  to  point  out  the  important 
factors  which  cause  differences. 

PROCEDURE  FOLLOWED 

In  starting  the  investigation,  an  attempt  was  made  to  call  on  all 
the  stores  in  the  state  which  were  selling  feed  and  grain,  and  the  deal- 
ers were  interviewed  personally.  They  approved  of  the  study  in 
practically  all  instances  and  discussed  theii  problems  freely,  especially 
when  assured  that  all  information  would  be  confidential  as  to  source. 
The  whole  state  was  canvassed  in  this  manner  and  information  col- 
lected for  the  year  1926  regarding  total  tonnage,  sales,  operating  costs, 
margins,  services,  etc.,  from  197  stores. 

After  tabulating  and  analyzing  these  data  it  was  evident  that  more 
detailed  figures  and  a  uniform  system  of  accounting  would  be  nec- 
essary before  definite  conclusions  could  be  drawn.  In  view  of  this, 
and  the  importance  of  the  information  already  gathered,  it  seemed 
best  to  call  a  meeting  of  the  grain  dealers.  Accordingly,  a  meeting 
was  held  at  Durham  with  good  attendance  from  all  sections  of  the 
state. 

The  facts  resulting  from  the  state-wide  sur^•ey  were  presented  at  the 
meeting.  As  the  result  of  discussion,  the  group  requested  that  a  com- 
mittee be  appointed  to  work  with  the  Station  to  draw  up  a  cost  ac- 
counting outline  which  would  be  adaptable  to  a  retail  grain  business. 
Later,  these  outlines  were  mailed  to  all  the  dealers,  who  were  re- 
quested to  use  them  in  summarizing  their  business  for  1928.     The  out- 

♦Cornell   Station   Bulletin  471. 
Ohio   Experiment  Station   Bulletin   416. 


4  N.  H.  Agri.  Experiment  Station  [Bulletin  251 

lines  were  given  reference  numbers  which  have  been  used  in  present- 
ing the  analysis  of  this  study  so  that  each  dealer  may  compare  his 
costs  and  margins  with  those  of  others. 

Through  the  cooperation  of  62  dealers,  postal  cards  were  mailed  to 
the  Station  weekly  during  1928  giving  each  dealer's  retail  cash  price 
for  corn,  wheat,  cottonseed,  gluten  feed,  standard  bran,  standard  mid- 
dlings and  definite  brands  of  scratch,  dry  mash  and  dairy  feeds.  Al- 
so, ten  wholesale  distributors  and  manufacturers  sent  their  mixed  car 
quotations  regularly  for  the  same  period.  Through  comparison  of 
these  quotations  it  is  possible  to  show  the  range  in  weekly  retail  prices 
for  the  same  commodity  as  well  as  the  difference  in  the  wholesale 
prices;  to  determine  how  closely  the  market  is  followed;  and  to  learn 
the  effect  of  operating  costs  on  the  retail  price  of  grain. 

Complete  cost  accounting  records  were  obtained  from  41  stores  for 
the  business  transacted  during  1928.  These  records  form  the  main 
basis  of  the  analysis  in  this  report.  They  are  supplemented  by  the 
infomiation  for  1926,  gathered  in  the  state  survey.  Due  to  the  lim- 
ited number  of  cooperative  owned  stores  in  the  state,  it  seems  im- 
practicable to  make  comparisons  of  the  cooperatives  with  the  private 
owned  stores. 

DEFINITION  OF  TERMS 

Grain  Store:  when  75  per  cent  or  more  of  the  total  yearly  sales 
are  for  feed  and  grains. 

General  Merchandise  Store:  when  feed  and  grain  sales  are  less 
than  75  per  cent. 

Fixed  Expense:  includes  depreciation,  insurance,  rent,  taxes  and 
interest.  In  this  study,  yearly  interest,  at  6  per  cent  was  charged  on 
net  worth.  Depreciation  on  frame  buildings  was  charged  at  4  per  cent 
and  2  per  cent  on  brick  or  stone.  A  10  per  cent  depreciation  rate  was 
charged  on  equipment.  (Depreciation  on  truck  and  delivery  equip- 
ment is  included  under  the  heading  of  delivery  costs). 

Labor  Expense:  includes  amount  paid  to  the  manager,  book-keeper 
and  to  the  regular  labor.  The  value  of  the  proprietor's  time  where 
no  regular  salary  was  paid  was  figured  at  $35.00  a  week. 

Delivery  Expense:  includes  gas,  oil,  repairs,  depreciation  and  mis- 
cellaneous items.  A  yearly  truck  depreciation  was  charged  at  25%  of 
original  cost  price.  Expenses  for  the  maintenance  of  horses  and  wag- 
ons are  inclucled  under  this  head. 

Other  Expense:  includes  telephone,  light,  power,  office  supplies, 
fuel,  repairs,  demurrage,  bad  debts,  collection  charges  and  interest 
paid  on  borrowed  capital.  (Large  repair  bills  were  redistributed  over 
a  period  of  years.)  Travel  and  all  other  items  not  heretofore  men- 
tioned were  included  under  miscellaneous. 

Total  Costs:  include  the  fixed,  labor,  delivery  and  other  costs  which 
are  incurred  during  one  year's  operation. 


July.  1930] 


Operating  Costs  of  Grain  Stores 


Inventory:  the  value  of  stock  on  hand  figured  at  market  price  or 
original  cost  depending  on  which  is  the  lowest. 

Cost  of  Goods  Sold:  includes  original  cost  plus  freight  to  railroad 
station  and  after  adjustment  has  been  made  for  inventories  at  the  be- 
ginning and  end  of  year. 

Net  Sales  or  Total  Sales:  the  amount  received  in  exchange  for 
goods  sold  during  a  year,  after  adjustments  have  been  made  for  goods 
retiu'ned. 

Gross  Margin:  the  difference  between  the  cost  of  goods  sold  and 
net  sales.  Small  amounts  of  miscellaneous  income  were  included  in 
this  item. 

Net  Income  or  Profit:  the  difference  between  gross  margin  and  to- 
tal costs;  also  referred  to  as  net  profit. 

Cash  Sales:  that  pan  of  total  sales  for  which  cash  is  paid  at  the 
time  the  transaction  occurs. 

Credit  Sales:  that  part  of  total  sales  which  is  not  paid  for  in  cash 
at  time  of  transaction. 

THE   STATE   SURVEY 


Of  the  197  stores  visited  in  the  state  survey.  107  could  be  classed 
as  feed  stores  and  90  as  general  merchandise  stores.  Often  the  gen- 
eral merchandise  store  handled  grain  as  a  side  issue,  either  as  an  ac- 
commodation to  its  customers  or  because  of  the  pressure  of  competi- 
tion. Quite  frequently  it  secured  this  grain  in  small  amounts  from 
the  local  grain  store. 

More  comj^lete  records  were  procured  from  the  grain  than  from  the 
general  merchandise  stores.  The  latter  made  no  effort  to  keep  the 
grain  sales  separate.  The  lack  of  a  definite  system  of  keeping  records 
was  frequently  evident.  ^lany  dealers  had  no  record  of  current  ex- 
penses or  tonnage  handled.     Neither   did   they  realize   that  they   had 

Table  1 — Gross  Margin  Variation  of  171  Grain  and  General  Merchandise 

Stores  During  1926 


Gross  Margin  per  Ton 

Number  in 

Gross  Margin 

Number  in 

Each  Class 

Percentage  of  Sales 

Each  Class 

si.  00— SI.  99 

4 

Less  than  10. 

4 

S2.00—  2.99 

Iti 

10—10.9 

15 

.S3. 00—  3.99 

14 

11—11.9 

3 

S4.00—  4.99 

44 

12—12.9 

4 

.S5.00—  5.99 

33 

1.3—13.9 

S6.00 —  and  above 

27 

14—14.9 

15 — and  above 

7 

Total 

138 

33 

The  average  gross  margin  was  54.71  per  ton  and  11.29  per  cent  of  sales. 


N.  H.  Agri.  Experiment  Station 


[Bulletin  251 


operated  at  a  loss  which  was  often  demonstrated  when  their  accounts 
were  figured.  On  the  other  hand,  there  were  dealers  who  kept  exact 
records  and  balanced  their  books  monthly.  They  knew  when  and 
how  they  had  made  or  lost  money.  In  all  instances,  an  effort  was 
made  to  obtain  all  the  information  possible,  and  estimates  were  tak- 
en when  records  were  not  available. 

Total  tonnage  of  grain  sold  in  New  Hampshire  during  1926  was 
210,835  tons,  of  which  15  per  cent  was  sold  at  the  car  door,  62  per 
cent  at  the  store  and  23  per  cent  was  delivered  to  customers. 

Gross  margins  varied  among  the  stores  as  shown  in  Table  1.  Where 
dealers  dia  not  iiave  a  regular  system  of  accounts,  gross  margins  were 
estimated,  sometimes  in  dollars  per  ton,  sometimes  in  per  cent  of  sales. 
The  average  gross  margin  per  ton  of  138  dealers  was  $4.71,  and  the 
average  per  cent  of  sales  of  33  dealers  was  $11.29.  There  were  12  gen- 
eral merchandise  stores  handling  grain  on  a  margin  between  $2  and  $3 
a  ton.  This  is  the  group  which  sold  grain  primarily  because  it  brought 
trade  to  their  store. 

Gross  margins  at  the  car  door  varied  from  $1  to  $3  a  ton,  with  the 
larger  number  charging  about  $1.50  a  ton. 


Table  2 — Average  Net  Sales,  Gross  Margins,  Operating  Costs  and  Net  Income  of 

41  Retail  Grain  Stores  in  1928 


Total 
Amount 

Average 
Amount 

Per  cent 

of  Net 

Sales 

Total  Costs 

Amount 

Per  cent 

of 

Total 

Net  sales 

$4,539,018.25 

4,029,832.94 

509,185.31 

14,695.09 
19,850.14 
16,932.09 
52,517.05 

16,273.40 

252,451.20 

42,105.23 

5,530.29 

5,904.98 

10,571.88 

9,736.28 

329.00 

4,728.11 

8,761.56 

12,621.42 

15,255.04 

$110,707.76 

98,288.61 
12,419.15 

358.42 

484.15 

412.98 

1,280.90 

396.91 

6,157.35 

1,026.96 

134.88 
144.02 
257.85 
237.47 
8.02 
115.32 
213.70 
307.84 
372.08 

100.00 

88.78 
11   22 

.32 

.44 

.37 

1.16 

.36 

5.56 

.93 

12 
.13 
.23 
.21 
.01 
.10 
.19 
.28 
.34 

$120,267.77 

$252,451.20 
$42,105.23 

$73,438.56 

Cost  of  goods  sold 

Gross  margin 

Fixed  costs: — 

Rent 

Taxes 

Insurance 

Interest  on  net  worth.  .  . 

Depreciation   on   build- 
ings and  equipment .  . . 
Labor  costs: — 

Salaries  and  wages 

Delivery  costs: — 

Gas,  oil,  repairs,  depre- 
ciation, miscellaneous 
Other  costs: — 

Stationery  and  postage .  . 

Telephone  and  telegraph 

Light  and  power 

Net  interest 

24.63 

51.70 

8.63 

15.04 

Demurrage 

Advertising 

General  repairs 

Bad  debts 

Miscellaneous 

Total  Costs     

$488,262.76 
$20,922.55 

$11,908.85 
$510.31 

10.76% 

.46% 

$488,262.76 

100% 

Net  Income 

July,  1930J  Operating  Costs  of  Grain  Stores  7 

ANALYSIS   OF  COSTS   FROM  41   STORES 

The  bu.-^iness  transacted  in  1928  l)y  41  grain  stores  has  been  sum- 
marized in  Table  2.  These  figures  were  taken  from  the  cost  account- 
ing outlines.  Attention  is  called  to  the  colunm  titled,  "Per  cent  of 
net  sales."  It  will  be  noted  that  the  average  gross  margin  for  all 
stores  was  11.22  per  cent,  total  expense  10.76  per  cent  and  net  income 
.46  per  cent  of  total  sales.  Judging  the  grain  stores  as  a  whole  on  the 
basis  of  this  sample,  they  are  not  making  a  large  net  i^rofit.  Current 
ex])enses  are  distributed  under  four  main  heads  in  the  last  column  as 
follows: — fixed  costs  24.63  per  cent,  labor  costs  51.70  per  cent,  deliv- 
ery costs  8.63  per  cent  and  other  costs  15.04  per  cent. 

Great  variations  occur  in  costs  between  stores  as  given  in  Table  22 
and  illustrated  in  Figure  1.  There  is  a  range  in  total  costs  per  dollar 
of  sales  from  $.06  to  $.18;  other  costs  vary  from  less  than  half  a  cent 
to  about  $.07;  delivery  costs  from  nothing  to  over  $.02;  labor  costs 
vary  from  $.035  to  $.105;  and  fixed  costs  vary  from  $.01  to  $.05. 

Although  the  stores  are  arranged  in  Figure  1  in  order  of  increasing 
costs  per  dollar  of  sales,  the  fixed,  labor,  delivery  and  other  costs  do 
not  increase  in  the  same  proportion;  i.e.,  fixed  costs  may  be  low, 
while  labor  and  other  costs  are  high.  This  is  well  illustrated  by  Store 
8  where  other  costs  are  large  because  of  an  unusual  bad  debt  item. 
Just  the  opposite  results  are  obtained  by  the  manager  of  Store  6.  Here 
the  delivery  cost  is  nothing;  the  fixed,  labor  and  other  costs  are  low. 
The  primary  reason  the  total  costs  for  Store  6  are  lower  than  for 
Store  8  is  because  vearlv  sales  are  so  much  larger.  Total  costs  of 
6  were  84488.34  and  total  sales  $70,522.09.  making  a  cost  of  $.0635 
for  each  dollar  of  sales.  On  the  other  hand,  total  costs  for  8  were 
$7579.16  and  total  sales  $40,924.62.  which  resulted  in  a  total  cost  of 
$.1850  for  each  dollar  of  sales.  Undoubtedly.  Store  8  is  equipped  and 
capable  of  doing  twice  the  amount  of  business  shown  in  its  report. 

Store  47  has  exceptionally  large  labor  costs.  In  this  instance,  the 
store  is  operated  by  the  proprietor.  The  value  of  his  labor  was  fig- 
ured at  $35  per  week,  the  rate  for  proprietors  who  were  on  full  time. 
It  is  possible  the  manager  does  not  value  his  time  so  high;  if  so,  the 
labor  cost  per  dollar  of  sales  would  be  reduced.  On  the  other  hand, 
the  yearly  sales  are  approximately  $18,000.  If  they  were  double  this 
amount,  all  costs  would  be  cut  in  half  and  a  net  profit  would  result 
instead  of  a  loss. 

The  final  results  of  store  operations  are  presented  in  Table  22.  Di- 
rect comparisons  between  total  costs  and  gross  margins  can  be  made 
for  each  store.  In  some  cases  the  variations  are  quite  striking.  The 
effect  of  competition  causes  gross  margins  to  hold  near  the  13  and  14 
cent  level  even  though  total  costs  may  exceed  this  amount.  The  man- 
agers do  not  care  to  raise  the  gross  margin  enough  to  absorb  the  loss 
for  fear  of  losing  trade. 

One  store  had  a  gross  margin  of  $.1594  per  dollar  of  sales,  con- 
trasted to  total  costs  of  $.0784;  another  of  $.1818  compared  to  $.1007, 
leaving  a  net  profit  of  $.0810  and  $.0811  respectively  for  each  dollar 
of  goods  sold.     The  opposite  condition  is  tiiie  with  Stores  179  and  8. 


8 


N.  H.  Agri.  Experiment  Station 


[Bulletin  251 


They  have  a  net  loss  of  $.0628  and  $.0941  respectively  for  each  dol- 
lar of  goods  sold.  These  cases  are  the  extremes,  and  it  will  be  noted 
that  the  largest  group  maintain  a  more  even  balance  between  gross 
margins  and  total  costs. 

When  there  is  so  even  a  balance  between  operating  a  business  for 
a  loss  or  a  profit,  it  is  absolutely  essential  that  a  clear-cut  system  of 
accounting  be  used  which  will  show  on  a  monthly  basis  which  way 
the  business  is  headed.  It  is  too  late  to  wait  until  the  end  of  the 
year  to  figure  final  results.  The  men  who  are  continually  running  at 
a  loss  cannot  stay  in  the  business  for  long. 

FIXED  COSTS 

Fixed  costs  are  often  referred  to  as  the  "dirti"  five,  namely,  depre- 
ciation, insurance,  rent,  taxes  and  interest.  Yearly  interest  costs  are 
flexible,  whereas  the  other  costs  continue  at  approximately  the  same 
amount  year  after  year.  Large  or  small  stock  inventory  values  and 
varying  amounts  in  accounts  and  notes  receivable  will  affect  the  net 
worth,  which  in  turn  may  reduce  or  increase  the  interest  charge  on 
net  worth.  For  this  reason,  the  men  who  are  on  a  cash  basis  would 
have  smaller  overhead  expense.  Also,  a  convenient  and  not  too  large 
a  building  located  on  a  railroad  siding  is  an  important  factor  in  keep- 
ing the  fixed  costs  as  well  as  the  necessary  labor  requirements  low. 


Table  3 — Fixed  Cost  and  Capital  Distribution  of  13  Rented  and  28  Owned  Stores 


Rented 

Owned 

ITEMS 

Total 
Amount 

Per  Cent 
Distribu- 
tion 

Total 
Amount 

Per  Cent 
Distribu- 
tion 

Fixed  Cost: — 

Rent     

$12,613.12 
3,778.11 
4,514.84 
5,576.47 

1,147.22 

45.68 
13.67 
16.33 
20.17 

4.15 

$2,063.97* 
16,072.03 
12,417.25 
46,940.58 

15,126.18 

2.23 

Taxes  

17.35 

Insurance 

13.41 

Interest  on  net  worth         

50.68 

Depreciation   on  building  and 
equipment 

16.33 

Total 

$27,647.76 

$28,539.00 

13,853.84 

117,272.84 

132,757.00 

100% 

9.76 

4.74 

40.10 

45.40 

$92,620.01 

$278,802.79 

81,643.30 

40,190.75 

275,857.37 

350,103.63 

100% 

Capital: — 

Land  and  buildings 

29.58 

Equipment 

Cash  on  hand 

Accounts  and  notes  receivable .  . 
Stock  inventory 

8.79 

3.78 

21.22 

36.63 

Total 

$292,422.68 

100% 

$1,026,597.84 

100% 

*Rent  for  railroad  siding  and  railroad  land. 

The  total  sales  of  13  rented  stores  was  $1,250,748.39,  or  a  fixed  cost  per  dollar  of  sales 
of  $0.0221.  Total  sales  of  28  owned  stores  was  $3,288,269.86,  or  a  fixed  cost  per  dollar 
of  sales  of  $0.0282. 


July,  1930]  Operating  Costs  of  Grain  Stores 

Table  4 — Variation  of  Store  Sales  Compared  with  Fixed  Costs 


Fixed  Cost 
Class  Limits 

Total 

Sales 

Store 
Reference 
N  umbers 

Fixed  Cost 
Class  Limits 

^Potal 
Sales 

Store 
Reference 
Numbers 

SGOO—    $999 

$18,000 
23  ,910 
29  .610 
35  .000 
40  ,924 
43,812 
70  ,522 

47 

49 

178 

195 

8 

160 

6 

S2,000—  $2,499 

$62 ,495 

66  ,000 

83  ,764 

98  ,686 

100  ,449 

122  ,608 

133  ,017 

137  ,507 

152 ,724 

156 
189 
149 

5 
126 
131 

7 
132 

4 

34 ,587 
55  .591 
67  .037 
75  ,352 
98  ,625 
138  ,000 

142 
201 
185 
167 
193 
186 

«1 ,000— $1  ,499 

$2,500—  $5,400 

81  ,467 

86  ,457 

87  ,621 
100,719 
103  ,668 
104,700 
110,853 
123  ,631 
141  ,873 
203  ,330 

197 
19 
128 
124 
127 
179 
198 
184 
154 
18 

$1  ,500— $1 ,999 

30  .967 
64  ,377 
83,618 
96,104 
118.247 
148 ,030 

192 
51 
125 
129 
168 
148 

$6,500— $19,250 

180  ,962 
193  ,000 
791,159 

188 
171 
130 

The  fixed  cost  and  capital  distribution  of  the  41  stores  are  given  in 
Table  3.  Thirteen  stores  were  rented  and  28  were  owned.  Analysis 
01  these  data  shows  the  rented  stores  had  a  more  favorable  ratio  be- 
tween fixed  costs  per  dollar  of  sales  than  the  owned  stores.  This  ra- 
tio v\-as  $.0221  for  the  rented  and  $.0282  for  the  owned,  or  a  differ- 
ence in  fixed  costs  per  dollar  of  sales  of  $.0061  in  favor  of  the  rented 
stores.  Also  the  capital  turnover  of  the  rented  stores  was  4.3  times 
compared  to  3.2  times  for  the  owned  stores. 

Table  5 — Relation  of  Fixed  Costs  per  Dollar  of  Sales  to  Increasing  Volume  of  Business 


Fixed  Cost  Class  Limits 


Total  Sales  Class  Limits 


Less 
$40 ,000 


$40 .000  to 
120 ,000 


Above 
$120 ,000 


$.0100— .0199 

.0200— .0299 

.0300— .0399 

.0400— .0499 

.0500— .0599 

Number  stores  in  each  class 
Average  fixed  cost 


3 
1 
1 
1 


8 
3 
3 

9 


6 
.  0350 


23 
.0272 


i 
1 
3 


12 
.0240 


10 


N.  H.  Agri.  Experiment  Station 


[Bulletin  251 


Perhaps  the  most  surprising  results  obtained  in  the  study  are  the 
great  differences  in  amount  of  sales  compared  with  the  actual  amount 
of  fixed  costs.  (Table  4).  No  better  example  could  be  had  of  effici- 
ency and  lack  of  efficiency  in  the  use  of  capital  than  is  apparent  in 
these  illustrations.  A  range  in  total  amount  of  fixed  costs  from  $600 
to  $1000,  for  instance,  resulted  in  sales  varying  from  $18,000  to  $70,522. 

The  ratio  of  fixed  costs  in  relation  to  sales  is  obtained  by  dividing 
the  amount  of  fixed  costs  by  the  total  sales  for  each  store.  Although 
the  majority  have  fixed  costs  per  dollar  of  sales  between  one  and  three 
cents,  there  are  many  who  have  more;  four  stores  have  over  five 
cents  in  this  item.  The  extremes  noted  in  the  previous  table  are  not 
so  apparent  when  reduced  to  the  ratio  basis  shown  in  Table  5.  There 
were  14  stores  with  an  average  of  $.015,  12  with  $.025,  7  with  $.035, 


Table  6 — Relation  of  Total  Investment  Turnover  to  Fixed  Costs  per  Dollar  of  Sales 


Fixed  Cost  Class  Limits 

Total  Number 

Turnover  Class  Limits 

$.0100 
to 
.0199 

$.0200 
to 
.0299 

$.0300 
and 
above 

of  Stores  in 
Each  Class 

1—  1  9 

1 
3 
4 
4 
1 

1 

5 
2 
2 
2 

1 

2 
8 
3 

1 

1 

2 

2—  2.9 

14 

3       39                   

8 

4—  4.9 

5       59           

7 
6 

6       69         

1 

7 —  7  9           

1 

8      89         

1 

11—11  9     

1 

Number  stores  in  class 

Averafffi  turnover              

14 

4.86 

12 

3.92 

15 
3.30 

41 

4  with  $.045  and  4  with  $.055  fixed  cost  per  dollar  of  sales.  As  total 
sales  increase  from  less  than  $40,000  to  $120,000,  fixed  costs  decrease 
from  $.0350  to  $.0240  per  dollar  of  sales. 

Effect  of  Turnover  of  Total  Investment  on  Fixed  Costs 

Store  managers  are  interested  in  knowing  how  rapid  a  turnover  of 
total  assets  is  made  in  relation  to  yearly  sales.  This  is  found  by  di- 
viding the  sales  by  the  total  investment.  Turnovers  varied  from  1  to 
12  times  with  an  average  for  all  stores  of  4.04  times. 

By  comparing  total  investment  turnover  with  fixed  costs  per  dollar 
of  sale,  it  is  apparent  that  low  costs  are  the  result  of  rapid  turnovers 
and  high  costs  the  result  of  slow  ones.  Those  stores  wliich  had  small 
turnovers  were  operating  at  a  disadvantage.  (Table  6).  There  was 
a  difference  of  over  $.015  in  fixed  cost  per  dollar  of  sales  as  the  total 
investment  turnover  varied  from  4.86  to  3.30  times. 


July,  1930]  Operating  Costs  of  Grain  Stores  11 

Table  7 — Relation  of  Total  Investmejits  to  Fixed  Costs  per  Dollar  of  Sales 


Total  Investment  Class  Limits 


Fixed  Cost  Class  Limits 


$.0100 
to 
.0199 


$.0200 
to 
.0299 


$.0300 

and 
above 


Less  than  $10.000 

$10,000—  19,999 

$20,000--  29,999 

$30,000—  39,999 

$40,000—  49,999 

$50,000—  59,999 

$00  .000—  ()9  ,999 

$70,000—  79,999 

$S0,000—  S9,999 

$90,000—  99,999 

100,000—109,999 

110,000—119,999 

100,000—169,999 

Number  stores  in  each  class 
Average  invest  ment 


1 
5 
2 

3 

2 

1 


14 
$27,143 


1 
6 

9 


12 

$31  ,667 


2 
3 
3 

2 
3 


15 

Iipoo  ,ooo 


Further  information  on  the  effect  of  large  and  small  investment  in 
relation  to  fixed  costs  per  dollar  of  sales  is  presented  in  Table  7.  A 
definite  relationship  is  noticeable;  that  is,  for  each  $5000  increase  of 
investment  there  is  an  average  increase  of  approximately  one  cent  in 
fixed  cost  i)er  dollar  of  sales.  Fourteen  stores  having  an  investment 
from  $10,000  to  $60,000  or  an  average  investment  of  $27,143  have 
lower  fixed  costs  per  dollar  of  sales  than  those  with  larger  capital  in- 
vestments. 

Table  8 — Relation  of  Fixed  Cost  to  Total  Cost  and  to  Gross  Margin  per  Dollar  of  Sales 


Total  Cost  Class  Limits 

Gross  Margin  Class  Limits 

Fixed  Cost  Class  Limits 

Less 

than 

$.0900 

$.0900 

to 
$.1199 

$.1200 
and 
above 

Less 

than 

$.1000 

$.1000 

to 
$.1299 

$.1300 

and 
above 

$.0100— $.0199 

8 
3 

4 
5 
2 

2 

2 
4 
5 
2 

4 

7 
1 

1 

1 

5 
6 
3 
3 

9 

$.0200— $.0299 

$.0300— $.0399 

5 
3 

$.0400— $.0499 

$.0500— $.0599 

1 
3 

Number  stores  in  class 

Average  fixed  cost   

11 
$.0177 

13 
$.0265 

17 
$.0361 

10 
$.0220 

17 
$.0273 

14 
$  033.5 

Relation  of  Fixed  Costs  to  Total  Costs  and  Gross  Margins 

Since  fixed  costs  represent  approximately  25  per  cent  of  total  costs 
of  all  stores,  they  affect  total  costs  and  gross  margins  but  not  in  like 
proportion.     (Table  8) .     A  $.03  increase  in  total   costs  per  dollar  of 


12  N.  H.  Agri.  Experiment  Station  [Bulletin  251 

sales  is  accompanied  by  an  average  increase  of  S.0184  in  fixed  costs 
per  dollar  of  sales.  Likewise,  a  $.03  increase  in  gross  margin  per  dol- 
lar of  sales  is  accompanied  by  a  general  increase  of  $.0115  in  fixed 
costs  per  dollar  of  sales. 

Summary  of  Fixed  Costs 

Because  fixed  costs  are  largely  made  of  items  which  are  not  subject 
to  change  the  only  sure  way  of  reducing  the  load  is  to  increase  the 
volume  of  business.  This  is  impossible  to  accomplish  in  many  sections 
where  competition  is  keen.  The  most  efficiently  operated  stores  are 
able  to  do  $100,000  worth  of  business  with  an  investment  of  approxi- 
mately $15,000.  Too  frecjuently,  capital  has  been  invested  in  build- 
ings which  have  a  capacity  several  times  larger  than  necessary.  Such 
instances  of  over-expansion  represent  an  economic  waste  to  the  com- 
munity. Occasionally  one  dealer  will  buy  out  another,  thereby  doub- 
ling his  volume  with  a  small  increase  in  overhead.  In  other  instances, 
the  stores  have  been  closed  or  changed  over  to  another  kind  of  business. 

Those  stores  having  satisfactory  but  not  elaborate  buildings  and 
equipment  equal  to  the  needs  of  their  business  are  in  an  advantageous 
position  to  meet  competition.  On  the  other  hand,  where  only  14  or 
%  of  the  building  si)ace  is  utilized,  such  conditions  are  certain  to 
throw  the  operating  ratios  out  of  balance.  Either  the  return  on  the 
capital  invested  in  buildings  is  low  as  competition  keeps  the  gross 
margin  to  a  minimum,  or  if  the  return  on  the  capital  in  such  build- 
ings and  equipment  approaches  normal,  the  gross  margin  has  usually 
been  raised  above  the  average.  In  many  instances,  the  buildings  were 
erected  at  a  time  when  the  volume  of  business  was  much  greater  and 
also  before  goods  were  sacked  and  sold  in  mixed  cars  so  that  more 
storage  space  was  necessary.  Since  these  over-large  buildings  are 
still  in  use  their  value  should  be  figin-ed  on  the  basis  of  earning 
power  in  relation  to  the  business  transacted  and  not  at  the  cost  of 
replacement.  Undoubtedly,  if  these  stores  were  to  be  replaced,  the 
amount  of  capital  required  would  be  much  less  than  their  present 
book  values  and  the  return  on  the  capital  invested  in  them  would 
then  be  commensurate  with  the  business. 

Referring  to  Tables  4  and  22,  it  will  be  seen  that  Store  192  has  fixed 
costs  of  over  $.05  per  dollar  of  sales;  and  has  the  smallest  sales  of 
any  in  the  group  in  relation  to  fixed  cost  expenditures.  The  manager 
of  this  store  has  an  accurate  bookkeeping  system.  He  realizes  his 
predicament  and  has  raised  the  gross  margin  on  sales  to  prevent  op- 
erating at  a  loss.  He  states  that  it  would  be  possible  to  handle  twice 
the  amount  of  grain  with  his  present  investment.  Although  this  man's 
customers  might  object  to  the  increased  margin,  the  question  arises: 
would  they  be  willing  to  go  without  the  convenience  of  a  local  grain 
store  in  the  community  and  obtain  the  grain  from  more  distant  points 
if  the  local  dealer  should  go  out  of  business? 

There  are  many  grain  stores  where  the  opposite  condition  is  true. 
Store  6  is  a  good  example  of  more  favorable  circumstances.  It  has 
fixed  costs  of  approximately  $.015  per  dollar  of  sales,  because  the 
fixed  costs  are  low  and  because  sales  are  exceptionally  high. 


Julv.  1930] 


Operating  Costs  of  Grain  Stores 


13 


Labor  Expense 

Over  half  the  expense  of  grain  stores  is  for  labor.  Even  though  this 
item  is  flexible  and  easily  changed,  there  are  many  instances  where 
too  much  help  is  maintained.  The  labor  requirements  vary  between 
stores  because  of  dissimilar  conditions.  One  store  may  be  a  mile  or 
so  from  the  railroad  siding,  or  it  may  be  in  a  community  where  small 
purchases  are  frequently  made,  or  the  building  and  equipment  may  be 
poorly  arranged  so  that  more  labor  is  required  for  operation.  Only  by 
checking  up  on  this  problem  as  to  sales  and  amount  of  idle  time  is  a 
manager  alile  to  guage  efficiency. 

Yearly  labor  costs  of  41  stores  are  compared  with  total  sales  in  Ta- 
ble 9.  The  extent  of  variation  is  not  so  apjiarent  as  when  a  similar 
comjiarison  was  made  with  fixed  costs;  but  it  will  be  noted  that  many 
stores  have  shifted  relative  positions. 

Number  Employed 

There  were  151.7  persons  employed  on  a  full-time  basis  in  the  41 
stores,  or  an  average  of  3.7  persons  per  store.  Seven  stores  employed 
1.5  persons  daily,  twelve  2.5,  twelve  3.5,  three  4.5,  three  5.5,  and  one 
store  employed  over  19  persons. 

Sales  per  Man 

Dividing  total  sales  by  number  of  persons  employed  in  a  store  gave 
the   average   yearly   sales   per   man.     The   average    for   all  stores   was 

Table  9 — Variation  of  Store  Sales  Compared  with  Labor  Costs 


Labor  Cost 
Class  Limits 

Total 
Sales 

Store 
Reference 
Number 

Labor  Cost 
Class  Limits 

Total 

Sales 

Store 
Reference 
Number 

$1 ,800—52 ,999 

$18 ,000 
23  ,910 
29,610 
30  ,967 
34 ,587 
35  ,000 
40  ,924 
43  ,812 
64  ,377 
70,522 

47 

49 

178 

192 

142 

195 

8 

160 

51 

6 

$4,500—  $7,499 

$81 ,467 
83,618 
98  ,625 
100  ,449 
100,719 
104  ,700 
110,853 
122  ,608 

137  ,507 

138  ,000 
148  ,030 

197 
125 
193 
126 
124 
179 
198 
131 
132 
186 
148 

55 ,591 
62  ,495 

66  ,000 

67  ,037 
75 ,352 
83  ,764 

86  ,457 

87  ,621 
96,104 

103  ,668 
118  ,247 

201 
156 
189 
185 
167 
125 
19 
128 
129 
.     127 
168 

S3  ,000— S4  ,499 

$7 ,500— $57 ,000 

98  ,686 
123 ,631 
133,017 
141 ,873 
152,724 
180 ,962 
193 ,000 
203 ,330 
791,159 

• 

5 

184 
7 

154 
4 

188 

171 
18 

130 

14 


X.  H.  Agri.  Experiment  Station 


[Bulletin  251 


132,805.  Sales  per  man  varied  from  less  tlian  $20,000  up  to  $60,000 
■ — an  indication  tliat  the  labor  problem  is  handled  more  efficiently  in 
some  stores  than  others. 

On  a  dollar  of  sales  basis,  the  range  was  from  $.03  to  $.10  with  an 
average  labor  cost  for  all  stores  of  $.0598  per  dollar  of  sales.  There 
were  four  stores  with  a  labor  cost  of  $.035  per  dollar  of  sales,  twelve 
with  $.045,  eleven  with  $.055,  eight  with  $.065,  four  with  $.075,  one 
with  $.085  and  one  with  $.105  labor  cost  per  dollar  of  sales. 

The  effect  on  the  labor  cost  of  securing  large  sales  per  man  is  shown 
in  Table  10.  Labor  costs  are  reduced  approximately  $.02  as  sales  per 
man  are  increased  from  $20,000  to  $60,000;  or  for  each  $1000  increase 
in  yearly  sales  per  man,  labor  costs  are  reduced  $.0005  per  dollar  of 
sales.  Since  labor  represents  over  half  the  total  cost  of  operating  a 
grain  store,  it  is  possible  to  show  the  relationships  for  sales  per  man 
with  total  costs  and  gross  margins  per  dollar  of  sales.  As  sales  per 
man  increase  from  $20,000  to  $60,000,  total  costs  decrease  approxi- 
mately $.06  and  gross  margins  approximately  $.05  per  dollar  of  sales. 

Fifteen  of  the  stores  included  in  this  analysis  were  operated  at  a 
loss  and  26  at  a  profit.  Many  more  of  the  stores  could  have  made 
a  profit  if  they  liad  dropped  one  or  two  men  from  the  pay  roll. 

Table  10 — Relation  of  Sales  per  Man  to  Labor  Costs,   Total  Costs  and  Gross  Mai-gins 


Sales  per  Man 
Class  Limits 

Number 

Stores 

Average  Labor 
Cost  for  Each 

Class 

Average  Total 

Cost  for  Each 

Class 

Average  Gross 
Margin  for 
Each  Class 

Less  than  $20  ,000       

4 
14 
10 
11 

2 

$.0653 
.0532 
.0499 
.0501 
.  0422 

$.1352 
.  1235 
.0990 
.1024 
.0736 

$.1317 

$20  ,000— $29  ,999 

«30  000 — $39 ,999     

.  1208 
.  1217 

$40  000 — $49 ,999        

.1094 

$50 ,000— $59  ,999 

.0886 

The  efficiency  of  those  stores  with  an  average  sale  per  man  of 
$32,000  or  above  is  reflected  not  only  in  greater  net  profit,  but  in  de- 
creased gross  margins.  This  means  a  decreased  price  of  grain  to  the 
trade. 

Because  of  the  small  sales  in  the  afternoon,  one  manager  found  it 
possible  to  save  the  expense  of  one  man  by  closing  the  store  half  a 
day  so  that  the  same  person  could  handle  sales  in  the  morning  and 
make  deliveries  in  the  afternoon.  This  change  was  effected  in  an  or- 
derly manner  by  mailing  notices  to  the  trade  several  weeks  in  advance, 
stating  the  mutual  advantages  to  be  gained  and  when  the  new  system 
would  commence.  Through  this  greater  efficiency,  labor  costs  were 
reduced  approximately  $1  a  ton.  The  yearly  sales  of  this  store  av- 
eraged $40,000  which  is  above  the  average  of  the  group  studied. 

Doubtless  many  border-line  cases  do  exist  where  added  or  decreased 
help  is  in  question.  Many  claim  they  can  afford  to  hire  a  man  to 
stay  at  the  store  while  they  visit  the  customers,  obtain  more  trade, 
collect  bills,  etc. 

Through  the  cooperation  of  five  store  managers,  the  daily  distribu- 


July,  1930] 


Operating  Costs  of  Grain  Stores 


15 


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16  iST.  H.  Agri.  Experiment  Station  [Bulletin  251 

tion  of  time  for  each  employee  was  obtained.  Representative  types 
of  stores  were  chosen  in  various  sections  of  the  state.  All  of  these 
five  stores  have  appeared  in  the  preceding  discussion  except  Store  172. 
One  report  covered  the  business  days  for  a  whole  month;  the  others 
were  for  a  week.  (Table  11).  The  distribution  of  labor  averaged: — 
delivering,  19.2  per  cent;  unloading,  16.  per  cent;  store  trade,  14.7  per 
cent;  book  accounts  and  correspondence,  13.9  per  cent;  sales  on  road, 
7.2  per  cent;  cleaning  and  repairing,  4.6  per  cent;  collecting  accounts, 
3.8  per  cent;  telephone,  1.8  per  cent;  mixing,  1.4  per  cent;  time  with 
salesmen,  .2  per  cent;  and  idle  time,  17.1  per  cent.  The  average  daily 
sales  for  all  stores  were  $215.13.  The  information  obtained  from  this 
small  sample  for  so  short  a  period  suggests  that  further  study  should  be 
made  along  these  lines.  Those  stores  which  have  a  low  sales  per  man 
undoubtedly  would  have  many  unproductive  hours  per  employee.  By 
referring  to  Figure  1  and  Table  22,  it  is  possible  to  note  the  sales, 
costs,  margins  and  profits  of  these  stores. 

Many  differences  may  be  observed  in  the  portion  of  time  given  un- 
der the  several  items.  For  instance,  Stores  185,  19  and  7  require  more 
time  for  delivery  than  for  waiting  on  trade.  The  reverse  is  true  of 
the  other  two,  mainly  because  they  were  one-man  stores.  Stores  185 
and  7  have  the  highest  percentages  in  amount  of  time  given  to  book 
accounts  and  correspondence,  as  an  office  girl  is  employed  regularly. 
Collecting  accounts  is  an  important  item  for  Stores  172  and  19.  Much 
time  is  used  by  Store  7  in  canvassing  for  more  business. 

The  effects  of  time  busy,  time  unoccupied,  and  total  number  of 
hours  the  store  was  open,  in  relation  to  the  sales  are  also  shown.  The 
stores  operated  by  one  man  have  an  advantage  over  the  others  when 
weekly  sales  are  compared  with  the  hours  worked.  This  advantage 
is  apparently  lost  when  the  number  of  hours  the  store  was  open  is 
compared  with  total  sales,  although  Store  172  continues  to  hold  first 
place  in  both  illustrations.  One  reason  Store  29  drops  to  lowest  place 
in  the  latter  comparison  is  because  of  the  long  hours  per  day  the  pro- 
prietor is  on  the  job.  He  does  the  majority  of  his  delivering  after 
usual  closing  hours,  working  more  than  IOV2  hours  a  day. 

The  yearly  average  sales  per  man  for  Stores  49.  185,  19  and  7  were 
$23,900,  $23,346,  $28,819  and  $22,100  respectively  which  is  consider- 
ably below  the  average  of  all  41  stores.  The  average  sales  per  store 
for  all  employees  during  the  time  the  store  was  open  varies  in  a  sim- 
ilar fashion,  i.  e.,  those  stores  having  the  lowest  yearly  sales  per  man 
employed  also  have  the  lowest  average  sales  per  hour  the  store  was 
open. 

If  we  judge  these  five  stores  on  the  basis  of  sales  per  hour  of  oc- 
cupied time,  the  one-man  stores,  49  and  172,  are  the  most  efficient. 
Their  average  sales  per  hour  were  over  twice  as  great  as  the  average 
sales  for  Stores  185,  19  and  7.  On  the  other  hand,  the  one-man  stores, 
49  and  172,  spent  64  per  cent  and  39  per  cent  respectively  of  the  time 
in  idleness,  whereas  the  other  stores  reported  20  per  cent  and  9  per 
cent  and  in  one  instance  no  idle  time  whatever.  No  checkup  was  made 
of  the  number  of  customers  and  size  of  individual  purchases  for  all 
stores. 


July,  1930] 


Operating  Costs  of  Grain  Stores 


17 


The  proprietor  of  Store  49  recorded  the  amount  of  time  required 
for  each  customer  and  the  number  of  patrons  for  a  month.  The  time 
varied  from  5  to  20  minutes  with  an  average  of  6  minutes  per  cus- 
tomer.    The  number  of  customers  varied  from  7  to  25  a  day. 

DELIVERY  COSTS 

The  state  survey  indicated  that  23  per  cent  of  the  grain  sold  in 
1926  was  delivered  by  the  dealers  to  the  customers.  The  dealers  of- 
ten expressed  the  opinion  that  the  demand  for  this  service  was  in- 
creasing. Over  half  of  the  stores  delivered  grain  without  any  extra 
charge,  as  is  shown  in  Table  12. 

Table   12 — Xumber  of  Stores  Delivering  Grain  ayid  Charges  Made  in  Village  and 

Outside   as   Reported   in   State   Survey 


For 
Delivery 
in  ^'ilIage 

For  Delivery  Outside  Village 

Total 

Charge  per  Bag 

No  Distance 
Given 

Less  than 
5  Miles 

More  than 
5  Miles* 

Number 
Stores 

Xo  charge 

S.Oo 

$  10  or  more        

66 
13 

8 

3 

5 

12 

13 

8 
5 

4 
7 
4 

86 
33 
29 

Total 

87 

20 

26 

15 

148 

*One  store  charges  15c  per  bag  for  10  miles,  and  another  20c  per  bag  for  15  miles. 


INIuch  of  the  promiscuous  system  of  charging  for  delivery  is  due  to 
competition  and  lack  of  cooperation  between  grain  dealers.  When  one 
store  manager  charges  5  cents  a  bag  for  delivering  or  delivers  free  of 
charge,  the  competitor  usually  does  the  same.  The  cost  of  delivering 
then  becomes  part  of  the  general  overhead  expense  and  is  paid  out  of 
the  gross  margin.  Those  men  who  are  located  five  miles  away  and 
have  their  ]xirchases  delivered  without  extra  charge  are  paying  for 
only  part  of  the  delivery  service,  whereas  the  men  who  buy  grain  at 
the  store  at  the  same  price  are  paying  too  much  in  that  they  are  con- 
tributing to  the  cost  of  the  service  which  the  other  men  receive.  This 
inequitable  method  of  charging  for  delivery  is  not  fair  to  the  trade. 
It  is,  however,  possible  that  it  costs  as  much  to  deliver  nearby  as 
farther  out  because  of  smaller  orders  and  more  frequent  demand  for 
service. 

Undoubtedly  grain  dealers  are  in  a  more  advantageous  position  to 
deliver  grain  throughout  the  greater  part  of  the  year  than  are  the 
customers  to  do  their  own  hauling.  In  many  instances  the  stores  are 
not  located  on  a  railroad  siding,  and  all  of  the  grain  has  to  be  hauled 
to  the  store  by  team  or  truck.  Usually  these  stores  have  their  own 
hauling  equipment  and  are  able  to  render  deliveiy  service.  This  prob- 
lem has  been  worked  out  most  satisfactorily  where  zoning  systems 
have  been  established  along  wdth  regular  routes  which  are  covered 
weekly.     In  this  way  the  customer  pays  for  the  service  rendered. 


18 


N.  H.  Agri.  Experiment  Station 


[Bulletin  251 


So  much  irregularity  was  found  in  the  state  survey  concerning  de- 
livery charges  that  tlie  attempt  was  made  in  the  cost  accounting  out- 
line to  assemble  these  costs  and  the  total  tonnage  delivered.  A  lim- 
ited number  of  tonnage  records  was  kept,  but  none  was  available  which 
gave  the  amount  credited  to  delivery  so  that  it  is  impossible  to  show 
whetlier  tiie  service  was  operated  at  a  profit  or  a  loss. 

Thirty-five  of  the  41  stores  reporting  for  1928  were  delivering  grain. 
The  average  delivery  cost  per  dollar  of  sales  was  $.012.  There  were 
sixteen  stores  with  delivery  costs  per  dollar  of  sales  less  than  $.01, 
fourteen  with  $.015,  four  with  $.025  and  one  with  $.035. 

OTHER  COSTS 

Whereas  the  majority  of  the  items  under  Other  Costs  are  of  a  mis- 
cellaneous nature,  the  skill  with  which  they  are  managed  can  make  or 
break  a  business.     Attention  is  called  to  their  distribution  in  Table  13 

Table   13 — Other   Cost   Distribution   of  41    Retail   Grain   Stores 


Expense  Items 


Amount  in 
Each  Item 


Per  cent 


Average 
Amount 


Stationery  and  postage .  . . 
Telephone  and  telegraph . 
Light  and  power  and  heat 

Net  interest 

Demurrage 

Advertising 

General  repairs 

Bad  debts 

Miscellaneous 

Total 


I  5,530.29 

5,904.98 

10,571.88 

9,736.28 

329.00 

4  ,728 

8,761 

12,621.42 

15,255.04 


11 
56 


$73,438.56 


7.5 

8.1 

14.4 

13.3 

.4 

6.4 

11.9 

17.2 

20.8 


100% 


$134.88 
144.03 
257 . 85 
237.47 
8.02 
115.32 
213.70 
307.84 
372 . 07 


,791.18 


with  special  emphasis  on  bad  debts  and  interest  paid  on  borrowed  cap- 
ital. These  items  are  flexible  and  of  greater  importance  to  the  stores 
furnishing  credit  than  to  those  on  a  cash  basis.  Since  9  of  the  41  are 
on  a  cash  basis,  the  percentage  of  other  costs  would  be  even  greater 
for  these  three  items  if  the  credit  stores  were  considered  separately. 
Interest  expense  will  vary  in  the  same  manner;  those  stores  supplying 
credit  usually  have  to  borrow  more  money  for  working  capital  than 
those  on  a  cash  basis. 

Demurrage  was  unimportant  except  for  two  stores,  where  it  could  be 
attributed  to  a  lack  of  working  capital.  With  one  it  is  the  result  of 
having  too  nuich  capital  tied  up  in  fixed  assets  which  are  beyond  the 
reqtiirements  of  the  business.  With  the  other,  working  capital  was 
lacking  because  of  too  liberal  a  credit  policy  based  on  a  small  net 
worth  in  the  business  so  that  the  local  bank  could  not  afford  to  ex- 
tend any  more  credit  to  the  dealer. 

Bad  debts  varied  from  none  up  to  $4000.  Store  8  had  the  highest 
other  costs  because  of  a  heavy  loss  due  to    over-extension    of    credit. 


July,  1930J 


Operating  Costs  of  Grain  Stores 


19 


As  a  rule  the  dealers  did  not  enter  any  bad  debts  expense  until  they 
were  positive  the  account  was  luicoliectablc.  Tlioy  did  venture  the 
opinion  that  many  of  their  accounts  probably  would  prove  worthless  if 
they  had  to  force  collection.  On  the  other  hand,  the  cash  stores  had  no 
bad  debts  expense.  (Forty-nine  stores  were  found  in  the  survey  which 
did  not  incur  any  bad  debts  although  they  had  extended  some  credit). 
Some  managers  are  selling  over  twice  as  many  dollars  worth  of 
goods  as  others  with  about  the  same  amount  of  expense  for  other 
costs.  (Table  14).  Apparently  Store  47  has  the  best  other  cost  ratio 
to  sales.  However,  it  is  doubtful  if  the  average  store  could  function 
satisfactorily  with  this  small  amount  of    expense.     The    store    has    no 


Tahi.k   14 — Variation  of  Store  Sales  Compared  with   Other   Costs 


Other  Cost 

Total 

Store 

Other  Cost 

Total 

Store 

Class  Limits 

Sales 

Reference 
Number 

Class  Limits 

Sales 

Reference 
Number 

$18,000.00 

47 

$40,924.62 

8 

23,910.23 

49 

75,3,52.56 

167 

30,967.30 

192 

81,467.00 

197 

$80 

34 .587. 00 

142 

83 ,764.. 59 

149 

to 

35,000.00 

195 

87 ,621 . 46 

128 

$450 

64,377.48 

51 

$1 ,350 

98,686.03 

5 

83,618.31 

125 

to 

110,853.32 

198 

96,104.60 

129 

$3  ,000 

118,247.14 

168 

100,449.31 

126 

122,608.99 

131 

1 

T^3  631    74 

184 

29,610.22 

178 

133,017.94 

7 

43,812.86 

160 

148,030.22 

148 

55,591.06 

201 

1.52,724.40 

4 

62,495.35 

1.56 

193,000  00 

171 

$500 

66,000.00 

189 

' 

- 

to 

67,037.34 

185 

104,700.53 

179 

$1 ,350 

70,522.09 

6 

$3,100 

138,000.00 

186 

86,4.57.97 

19 

to 

141,873.51 

154 

98,625.70 

193 

$12  ,800 

180, 962. 59 

188 

100,719.25 

124 

791,159,27 

130 

103,668.64 

127 

137,507.00 

132 

telephone,  and  does  no  delivering.  Stationery  and  postage  expense 
amounts  to  $10  and  fuel  to  $30.  There  was  $40  in  bad  debts,  though 
the  store  had  90  per  cent  cash  sales.  No  money  is  paid  out  for  de- 
murrage or  for  interest  on  borrowed  capital.  On  the  other  hand,  it  is 
undoubtedly  costing  Store  179  more  for  other  costs  than  is  necessary. 
Total  sales  for  Store  47  are  only  $18,000,  whereas  Store  179  has 
$104,700  sales  with  $3142  of  other  costs  or  a  ratio  6  times  as  great. 
There  are  many  instances  where  similar  comparisons  might  be  made. 
The  average  other  costs  for  the  41  stores  was  $.0174  per  dollar  of 
sales.  There  were  ten  stores  with  other  costs  per  dollar  of  sales  less 
than  $.01,  twenty  with  $.015,  six  with  $.025,  four  with  $.035  and  one 
with  $.075.  Seven  of  the  cash  stores  are  in  the  first  group  where  other 
costs  are  less  than  $.01. 


20 


N.  H.  Agri.  Experiment  Station 


[Bulletin  251 


Although  other  costs  represent  only  15.04  per  cent  of  the  total  op- 
erating costs  of  the  41  stores,  they  show  a  definite  tendency  to  in- 
crease as  total  costs  increase.  The  influence  of  other  costs  on  gross 
margins  is  usually  similar  to  that  on  total  costs.  On  the  other  hand, 
the  exceptionally  large  item  of  $.075  appearing  under  other  costs  for 
Store  8,  due  to  bad  debts,  does  not  increase  the  gross  margin  a  like 
amount.  Ap})arcntly,  the  manager  accepted  this  loss  as  part  of  the 
game  and  did  not  attempt  to  make  it  up  by  raising  the  gross  margin. 

TOTAL  COSTS,  GROSS   MARGINS  AND   NET  PROFIT 

During  the  preceding  discussion,  attention  has  been  called  to  the 
important  factors  which  affected  the  fixed,  labor,  delivery  and  other 
costs  of  the  41  stores.  It  was  shown  in  Figure  1  that  the  costs  under 
these  four  heads  are  variable  and  of  much  more  importance  for  some 
stores  than  others.  A  summary  of  these  costs  for  the  individual  stores 
is  given  in  Table  22.  When  total  costs  are  subtracted  from  gross  mar- 
gins there  are  27  stores  which  made  a  profit  and  14  which  operated  at 
a  loss.  Undoubtedly  competition  causes  gross  margins  to  remain  at  a 
low  level  so  that  some  of  these  stores  are  unable  to  retrieve  their  losses. 

Many  of  the  stores  do  not  hold  the  same  relative  position  when  sales 
are  compared  with  the  amount  of  gross  margin  that  they  held  when 
sales  were  compared  with  fixed,  labor  or  other  costs.  (Tables  4,  9,  14 
and  15) .     This  is  to  be  expected  when  so  much  variation  is  found  con- 


Table    15 — Variation  of  Store   Sales   Compared  with   Gross   Margin 


Gross  Margins 
Class  Limits 

Total 
Sales 

Store 
Reference 
Number 

Gross  Margins 
Class  Limits 

Total 
Sales 

Store 
Reference 
Number 

$2,000 

to 
$6 ,500 

$18,000.00 
23,910.23 
29,610.22 
30,967.30 
34,587.00 
35,000.00 
40,924.62 
64,377.48 
70,522.09 
75,352.56 

47 

49 

178 

192 

142 

195 

8 

51 

6 

167 

$10  ,000 

to 
$15  ,600 

$66,000.00 
83,764.59 
98,686.00 
100,449.31 
100,719.25 
103,668.64 
118,247.14 
133,017.94 
137,507.00 
141,873.51 
203,330.63 
148,030.22 

189 
149 

5 
126 
124 
127 
168 

7 

132 

154 

18 

43,812.86 
55,591.06 
62,495.35 
67,037.34 
81,467.00 
83,618.31 
86,457.00 
87,621.46 
96,104.60 
98,625.70 
104,700.53 
123,631.74 

160 
201 
156 
185 
197 
125 
19 
128 
129 
193 
179 
184 

148 

$7  ,000 

to 
$9,999 

$16 ,000 

to 
$82,500 

110,853.32 
122,608.99 
138,000.00 
152,724.40 
180,962.59 
193,000.00 
791,159.27 

198 
131 
186 
4 
188 
171 
130 

July,  1930]  Operatixg  Costs  of  Grain  Stores  21 

cerning  the  importance  of  these  items  for  the  individual  stores.  It  is 
not  the  effect  of  volume  of  business  on  these  costs  which  should  be 
emiihasized,  but  the  fact  that  some  managers  are  able  to  conduct  sev- 
eral times  as  much  business  on  about  the  same  cost.  Many  managers 
remarked,  "If  only  I  could  increase  my  volume  of  business,  I  would  be 
all  right."  On  the  other  hand,  these  men  seldom  mentioned  the  cut- 
ting down  of  labor,  delivery,  bad  debts,  interest  and  the  costs  which 
are  flexible,  so  as  to  be  exjual  to  or  in  a  better  position  than  the  av- 


erage. 


INVENTORY  TURNOVER 


It  has  come  to  be  considered  a  business  axiom  that  the  more  often 
stock  is  sold  out  and  replenished,  the  larger  will  be  the  retuiTi  on  the 
investment,  because  a  margin  of  profit  is  realized  on  each  invcntoiy 
turnover.  A  smaller  amount  of  capital  is  required  to  do  a  given 
;i mount  of  business,  and  market  changes  are  more  easily  followed  when 
turnovers  are  rapid.  Other  advantages  are  decreases  in  spoilage  and 
waste,  and  in  insurance  and  tax  costs  because  of  a  smaller  inventor\\ 

The  inventory  turnover  of  the  41  stores  averaged  10.2  times.  There 
were  ten  stores  which  had  less  than  7  in\-entory  turnovers,  fifteen 
from  7  to  10,  eight  from  10  to  13  and  eight  with  more  than  13.  Store 
185  with  the  largest  turnover  of  22.5  times  had  a  total  cost  per  dollar 
of  sales  of  $.1081,  whereas  Store  192  with  the  lowest  turnover  of  3.5 
had  a  cost  of  $.1510.  When  the  total  costs  per  dollar  of  sales  are 
compared  with  the  number  of  inventory  turnovers  for  all  stores,  a 
marked  relationship  is  found;  i.e.,  slow  turnovers  are  associated  more 
often  with  high  costs  than  are  the  more  rapid  ones.  The  average  total 
cost  of  14  stores  having  inventory  turnovers  less  than  8  times  is  $.1228 
per  dollar  of  sales,  and  for  13  stores  having  more  than  11  turnovers 
it.  is  $.1057. 

The  slow  turnovers  suggest  that,  apparently,  some  stores  are  carry- 
ing much  larger  stocks  than  are  necessary.  Large  stocks  are  due  to 
several  causes:  e.g.,  keeping  three  or  four  different  brands  of  dairy  or 
poultry  feed  on  hand  so  as  to  satisfy  the  trade;  buying  in  straight 
carlots  to  reduce  the  cost  per  ton  in  spite  of  a  small  volume  of  busi- 
ness; and  the  handling  of  miscellaneous  goods  such  as  cement,  hard- 
ware and  farm  implements. 

CREDIT 

Data  collected  in  the  state  survey  showed  that  89  dealers  had  an 
average  amount  of  $870,521.50  in  accounts  and  notes  receivable. 
There  were  48  stores  having  less  than  $5000  regularly  in  accounts  re- 
ceivable, 18  from  $5000  to  $9999.  13  from  $10,000  to  $25,000  and  10 
with  more  than  $25,000,  the  largest  amount  carried  in  this  account 
being  $95,629. 

The  seriousness  of  these  accounts  is  better  appreciated  when  their 
average  amount  is  compared  to  yearly  sales.  (This  ratio  is  obtained 
by  dividing  the  average  amount  in  accounts  and  notes  receivable  by 
the  vearly  sales).     On  this  basis  there  were  24  stores  having  average 


22  N.  H.  Agri.  Experiment  Station  [Bulletin  251 

accounts  receivable  in  relation  to  sales  of  2.5  per  cent,  27  with  7.5  per 
cent,  20  with  12.5  per  cent,  9  with  20  per  cent,  and  9  with  more  than 
30  per  cent.  Three  stores  had  extended  so  much  credit  that  it  ex- 
ceeded 60  per  cent  of  total  sales. 

The  percentage  of  total  grain  sales  which  were  for  cash  varied  from 
10  to  100  per  cent.  Twenty-two  stores  were  found  in  the  state  sur- 
vey which  were  selling  grain  on  practically  a  cash  basis. 

As  a  usual  thing,  a  liberal  credit  policy  will  be  accompanied  by 
some  bad  debt.  During  1926,  the  losses  due  to  bad  debts  totaled 
$34,821.15  for  103  stores.  In  the  majority  of  stores  these  losses  were 
under  $200,  but  in  several  instances  amounted  to  more  than  $2000. 
Bad  debts  were  distributed  among  the  103  stores  as  follows:  34  with 
less  than  $100,  25  with  an  average  of  $150,  25  with  an  average  of 
$225,  and  19  with  more  than  $500. 

Bad  debts  varied  from  less  than  Y^  to  S^/o  per  cent  of  sales.  Some 
stores  build  up  a  reserve  for  bad  accounts  by  setting  aside  %  per 
cent  of  yearly  sales.  When  bad  debts  are  compared  with  sales,  33 
stores  have  bad  debts  less  than  .25  per  cent  of  sales,  25  have  .37  per 
cent,  18  have  .62  per  cent,  11  have  1  j^er  cent  and  11  have  more  than 
1.25  per  cent. 

Other  important  costs  resulting  from  supplying  credit  are  interest, 
credit  accounting,  office  supplies  and  collection   costs. 

Usually,  the  greater  part  of  the  accounts  was  in  book  and  not  note 
form,  so  that  no  direct  income  was  received  for  the  extension  of  credit. 
This  means  that  a  charge  for  credit  had  to  be  added  at  the  time  of 
sale  or  else  absorbed  as  part  of  the  general  overhead. 

A  study  of  grain  store  credit  in  New  York  State  showed  an  annual 
cost  of  13.35  per  cent — more  than  twice  the  6  per  cent  rate  charged  by 
banks.*  On  this  basis,  the  annual  cost  to  the  89  New  Hampshire 
grain  stores  of  extending  $870,520.50  of  credit  Avould  be  $116,214.48, 
or  $63,983.25  more  than  it  would  have  cost  if  obtained  from  banks. 

TURNOVER   OF   ACCOUNTS    RECEIVABLE 

In  order  to  determine  the  average  length  of  time  accounts  stay  on  the 
books,  the  amount  of  average  daily  sales  was  divided  into  the  av- 
erage amount  of  accounts  receivable.  This  turnover  of  accounts  re- 
ceivable for  the  89  stores  varied  from-  less  than  five  days  up  to  242 
days  with  an  average  of  38  days.     (Table  16). 

Cash  Discounts 

Practices  varied  tln-oughout  the  state  in  the  treatment  of  credit. 
Many  managers  made  no  effort  to  charge  for  this  service  or  to  differ- 
entiate between  a  cash  and  credit  customer.  Although  all  stores  did 
not  give  complete  reports  on  this  subject,  sufficient  evidence  was  found 
to  show  that  cash  sales  increased  as  the  discount  allowed  for  cash  in- 
creased from  nothing  up  to    10    and    15    cents    a    bag.     (Table    17). 

*Cornell    Station   Bulletin   430;    An   Economic   Stud\-    of   Rural   Store    Credit    in 
New   York. 


July,  1930J 


OPERATI^•G  Costs  of  Grain  Stores 


23 


Table  16 — Accoimts  Receivable  Turnover  in  Days,  Reported  by  89  Stores  in 

State  Survey  of  1926 


Average  Number  of  Days  on  Books 

Less  than  10 

10— 2!).  09 

30—59.09 

Above  60 

Total 

Average  number  of  days 


Number  of  Stores  in  Each  Class 


14 
37 
25 
13 

89 
38.17 


Several  stores  had  accounts  on  their  books  for  185  and  240  days. 

When  nothing  was  allowed  for  cash,  the  average  per  cent  of  cash 
sales  for  15  stores  was  41  per  cent;  when  a  discount  of  $.05  a  bag 
was  made,  47  stores  had  an  average  of  53  per  cent  cash  sales;  and 
likewise  for  $.10  and  $.15  a  bag  the  average  respective  cash  sales 
were  57  and  60  per  cent. 

Monthly  Statement 

As  a  general  nde,  no  monthly  statement  was  sent  out  from  the 
stores.  Only  29  out  of  122  stores  mailed  statements  regularly  to  their 
customers.  Duplicate  sales  slips,  one  for  the  customer  and  the  other 
to  be  placed  on  file,  were  more  commonly  used  showing  the  amount 
carried  forward  and  an  itemized  statement  of  the  goods  sold.  There 
were  sections  where  the  managers  found  they  caused  dissatisfaction 
among  their  customers  through  sending  statements.  In  other  sections, 
the  trade  has  become  accustomed  to  receiving  a  statement  and  often 


T.\BLE   17 — Distribution  of  Percentage  Cash  Sales  According  to   Cash  Discounts, 
Reported  by  83  Stores  in  State  Survey  of   1926 


Number  Stores  in  Each  Class 

Per  cent  Cash  Sales 

No 
Discount 

Discount  per  Bag 

$.05 

$.10 

$.15 

Less  than  10  

3 

2 

6 

1 
1 

7 

8 

4 

13 

7 
6 

1 
1 

1 
2 

4 
4 
4 
3 

1 

10     19  9       

20     29  9       

30     39  9         

40 — 49  9       

50 — 59  9        

1 

BO — 69  9        

1 

70 — 79  9         

80 — ^89  9             

90 — 99  9             

Total 

15 
41 

47 
53 

19 
57 

2 

Average  per  cent  cash  sales .  . 

60 

24  N.  H.  Agri.  Experiment  Station  [Bulletin  251 

waits  for  it  before  paying  the  bill.     The  amount  of  time  given  varied 
from  7  to  90  clays  for  73  stores,  while  47  stores  had  no  time  limit. 

PRICE  ANALYSIS 

When  a  customer  purchases  a  sack  of  grain,  he  pays  for  several 
other  services  although  grain  is  the  primary  object  of  the  transaction. 
The  dealer  who  keeps  the  store  open  from  7  A.  M.  until  5  P.  M.  is 
making  it  possible  for  his  customers  to  buy  grain  at  any  time  they 
are  likely  to  want  it.  When  the  customers  are  given  the  opportunity 
to  purchase  large  or  small  amounts  at  the  car  or  the  store  or  have  it 
delivered,  they  are  receiving  form  and  place  utilities.  When  credit 
is  extended,  they  are  receiving  still  another  service.  Often  the  trade 
confuses  these  services  and  compares  a  credit  price  at  the  store  with 
a  cash  price  at  the  car  door. 

The  previous  discussion  has  shown  that  these  distributing  services 
cost  money  and  that  there  is  a  great  difference  in  the  efficiency  with 
which  they  are  carried  out.  Those  stores  which  have  favorable  ratios 
of  fixed,  labor,  delivery  and  other  charges  are  in  the  best  position  to 
sell  grain  at  the  lowest  price,  although  some  take  advantage  of  the 
lack  of  competition  to  charge  a  higher  price  and  to  make  a  larger 
profit  even  though  their  costs  are  low.  Some  store  managers  are 
much  shrewder  buyers  than  others  and  are  able  to  make  savings 
which  help  to  reduce  the  general  overhead.  Because  of  these  differ- 
ences, the  prices  charged  for  grain  and  feeds  of  the  same  standard  and 
brand  varied  considerably  throughout  the  state. 

Weekly  retail  cash  store  prices  were  obtained  in  1928  from  62  stores 
iu  New  Hampshire,  for  approximately  a  whole  year,  for  corn,  wheat, 
middlings,  bran,  scratch  feed,  dry  mash,  dairy  feed,  cottonseed  and 
gluten  feed.  Because  the  number  of  stores  were  not  equally  distri- 
buted by  counties  it  does  not  seem  desirable  to  make  comparisons  on 
that  basis.  However,  when  the  prices  were  averaged  by  counties  some 
were  consistently  low  and  others  high.  Prices  for  one  week  in  July 
and  one  in  November  were  selected  for  comparison. 

The  smallest  range  in  average  prices  between  counties  occurred  with 
middlings,  for  which  there  was  only  6  cents  per  cwt.  difference  be- 
tween the  lowest  and  highest  prices;  similarly  for  corn  there  was  a 
range  of  only  10  cents  per  cwt.  The  greatest  difference  in  price  be- 
tween coimties  occurred  with  wheat  and  cottonseed,  for  which  there 
were  ranges  of  48  cents  and  57  cents  per  cwt.,  respectively. 

In  order  to  determine  which  feeds  showed  the  greatest  variations  in 
price  throughout  the  year,  all  the  low  and  all  the  high  weekly  retail 
prices  were  averaged  for  each.  The  greatest  range  is  $.79  and  $.74 
per  cwt.  respectively  for  poultry  wheat  and  cottonseed  meal,  and  the 
smallest  range  is  $.11  per  cwt.  for  two  poultrv  feeds  of  the  same 
brand.     (Table  18). 

When  all  the  retail  prices  for  a  year  are  averaged  for  each  standard 
grain  or  brand  of  mixed  feed,  and  compared  with  the  average  whole- 
sale distributor  price,  the  greatest  difference  is  $.31  per  cwt.  for  two 
poultry  feeds  of  the  same  brand  and  the  smallest  is  $.11  per  cwii. 
for  corn. 


July,  1930] 


Operating  Costs  of  Grain  Stores 


25 


T.\BLE   18 — Average  Retail  Cash   Prices  of  62  Stores   Compared   with   Average 
Wholesale  Mixed  Car  Prices  of  10  Distributors  for   Year  1928* 


Grains  and  Feeds 


No.  2  corn 

Poultry  wheat 

Standard  bran 

Standard  middlings. .  .  . 

Bufialo  gluten 

Cottonseed  meal — 36%. 


Dry  mash 
Dr}'  mash 
Dry  mash 
Scratch  feed 
Scratch  feetl 
Scratch  feed 
Dairy  feed 
Dairy  feed 


A. 
B. 
C. 
A. 
B. 
C. 
A. 
B. 


Retail 

Lowest 

Highest 

Price 
Range 

Average 

Average 

Average 

Retail 

Price 

Price 

Price 

$2.24 

$2.57 

$.33 

$2.39 

2.48 

3.27 

,79 

2.76 

2  04 

2.43 

.39 

2.24 

2  11 

2.62 

.51 

2.32 

2.40 

2.  SI 

.41 

2.62 

2.57 

3.31 

.74 

2.94 

3.07 

3.35 

.28 

3.21 

3.10 

3.41 

.31 

3.25 

3.16 

3.27 

.11 

3.21 

2.71 

2.97 

.26 

2.82 

2.71 

2.98 

.27 

2.85 

2.80 

2.91 

.11 

2.86 

2.71 

3.11 

.40 

2.91 

2.72 

2.95 

.23 

2.84 

\\'holesale 

Distrii)utor 

Average 

Price 


$2.28 
2 .  49 
2.05 
2.12 
2.45 
2.77 

2  90 
2.99 
2.91 
2.51 
2.60 
2.60 
2.77 


Difference 

Between 

Average 

Retail  and 

\\  holesale 

Prices 


5.11 
,27 
.19 
,20 
,17 
,17 

.31 
.26 
.30 
.31 
.25 
.26 
.14 
.12 


*A11  goods  sacked;  wholesale  prices  to  New  Hampshire  receiving  points. 

The  group  of  stores  having  the  lowest  average  price  during  the 
year  sold  grain  and  feed  for  less  than  replacement  costs.  Undoubt- 
edly they  purchased  their  supplies  on  a  favorable  market  and  passed 
these  savings  on  to  their  customers.  On  the  other  hand,  the  group 
which  charged  the  highest  average  price  during  the  year  took  consid- 
erable gross  margin  over  replacement  values. 

According  to  the  weekly  ciuotations  given  in  the  Boston  Produce 
]\Iarket  Report,  40  changes  occurred  in  the  price  of  No.  2  yellow 
corn*  during  1928.  In  contrast  to  these  market  changes  the  retailers 
shifted  prices  on  an  average  of  14.5  times. 

The  average  of  the  up-market  corn  changes  was  $.057,  and  the 
down  was  $.061  per  cwt.  On  the  other  hand,  the  average  of  all  retail 
price  changes  when  up  was  $.07,  and  when  down  $.075  per  cwt.  This 
seems  to  show  that  the  stores  are  no  more  apt  to  follow  changes  in 
the  market  upward  than  downward.  When  the  net  deviation  for  each 
store  was  figured  on  the  basis  of  its  price  change  being  greater  or 
smaller  than  the  market  change,  28  stores  were  found  which  did  not 
change  the  retail  price  of  corn  as  much  as  the  market  and  7  which 
made  greater  changes  than  the  market. 

*In  spite  of  the  fact  that  requests  for  prices  were  asked  for  on  the  basis 
of  No.  2  yellow  com,  there  is  of  course  a  possibility  of  confusion  of  grades. 
A  study  of  the  quotations  given  in  the  Boston  Produce  Market  Report  shows 
that  com  prices  of  the  same  grade  vary  from  1  to  2  cents  a  bushel;  also  that 
differences  between  the  highest  quotation  for  No.  2  yellow  corn  and  the  high- 
est quotation  of  No.  3  yellow  corn  vary  from  1  to  4  cents  a  bushel.  These 
market  variations  for  corn  prices  and  similarly  for  other  grains  and  feeds  could 
account  for  a  small  part  of  the   difference   in  prices  between  stores. 


26 


N.  H.  Agki.  Experiment  Station 


[Bulletin  251 


Table   19— Retail  Cash  Prices  per  Cwt.  of  41   Stores  During  the  First   Week 

in  December,   1928 


Store 

Reference 

Number 


47 

49 

178 

192 

142 

195 

8 

160 

201 

156 

51 

189 

185 

6 

167 

197 

125 

149 

19 

128 

129 

193 

5 

126 

124 

127 

179 

198 

168 

131 

184 

7 

132 

186 

154 

148 

4 

188 

171 

18 

130 

Average  price.  , 
Average  whole 
sale  price ... 


No.  2 

Yellow 

Corn 


52.25 
2.35 
2.15 

2  25 
2.30 
2.25 
2.30 
2.20 
2.25 
2.10 
2.20 
2.25 
2.30 


10 
20 
30 
10 
10 
25 
25 
10 


2. 

2. 

2. 

2. 

2 

2 

2 

2. 

2.10 

2.10 


30 
40 


2.50 
2.30 
2.20 
2.25 
2.15 
2.20 


2.20 
2.40 
2.10 

2.23 

2.08 


Poultry 
\^  heat 


40 

85 
25 
50 
40 

20 
30 
25 
25 
20 
40 
35 
35 
30 
75 
20 
20 
35 
20 
20 
25 
30 
20 
20 
20 
55 

40 
30 
60 
30 
50 
40 
35 
20 
25 
40 
40 
40 
20 

34 

15 


Standard 
Bran 


12.25 
2  30 
2.35 
2.30 
2.35 

2.20 
2  05 
2.35 


15 
20 
20 
20 
15 
00 
30 
20 
35 
30 
30 
30 
25 
30 
30 
30 
30 
15 


15 
10 
10 
25 
20 
25 
20 
15 


2.30 
2.23 

2.18 


Standard 
Middlings 


|;2.25 
2.35 
2.35 
2.35 
2.40 


2.20 
2.20 
2.40 
2.30 
2  15 
2.35 
2.25 
2.25 
2.30 
2.25 
2.30 
2.25 
2.45 
2.30 
2  30 
2.20 
2  30 
2.30 
2.30 
2.30 
2.35 
2.25 
2.30 
2.35 
2.30 
2.15 
2.15 
2.20 
2.30 
2.20 
2.25 
2.20 
2.30 
2.15 
2.30 


2.11 


Cottonseed 

Qacrr 


S2.S0 
2.80 


2.85 


2.95 
2.85 
2.70 


3.25 
2 


70 
70 
75 

85 

75 
75 
75 
75 

75 
75 
75 
80 
75 
75 


3.00 


2.75 


2,80 
2.65 
2.75 

2.79 

2.62 


Gluten 
Feed 


$2 .  80 
2 .  60 
2.65 


2.65 
2.70 

2.65 
2.60 
2  55 
2.65 
2.60 
2.70 
2.60 
2.55 
60 
85 


2 
2 
2 
2 

2 
2 

2 

2.55 
2 

'7 


55 
80 
60 
55 


55 
70 


2.60 

2.75 
2.50 
2.60 
2.60 
2.70 
2.55 
2.60 
2.70 
2.65 
2.55 

2.62 

2.51 


July,  1930J  Operating  Costs  of  Grain  Stores  27 

Further  comparison  of  store  prices  with  market  quotations  reveals 
that  a  time  lag  does  exist  between  them.  As  the  market  rose,  the  av- 
erage time  lag  of  all  stores  was  2.6  weeks,  but  when  it  fell  there  was 
an  average  lag  of  4.8  weeks. 

Retail  Store  Prices  Compared  for  One  Week 

Weekly  jn-ices  during  the  first  week  in  December,  1928,  for  No.  2 
yellow  corn,  poultry  wheat,  standard  bran,  standard  middlings,  36% 
cottonseed  and  gluten  feed  are  given  in  Table  19  by  stores.  These 
figures  show  a  considerable  variation  in  prices.  The  greatest  range 
is  65  cents  and  appears  in  wheat  prices  and  the  smallest  is  30  cents 
api)earing  in  bran,  middlings  and  gluten  prices.  Some  stores  were 
consistently  k)w  in  price  for  all  goods,  while  others  were  regularly  high. 

By  referring  to  the  store  numbers  in  Tables  19 — 22  and  Figure  1, 
the  effect  of  low  or  high  costs  on  gross  margins  may  be  seen.  Since 
the  gross  margin  reveals  the  effect  of  low  or  high  cost  factors,  store 
prices  to  the  consumer  are  likewise  high  or  low  as  the  gross  margin 
rises  or  falls. 

On  the  whole,  the  more  efficient  managers,  operating  stores  at  low 
costs,  are  passing  the  savings  on  to  the  buyer,  although  a  few  take 
advantage  of  the  lack  of  competition  to  obtain  bigger  profits.  Close 
competition  more  frequently  works  to  the  advantage  of  the  customers 
than  does  seeming  lack  of  it  against  them.  There  were  instances 
where  competition  forced  the  managers  to  operate  at  a  loss  because 
they  dared  not  raise  the  margin  for  fear  of  losing  trade.  Their  only 
salvation  is  to  reduce  overhead  costs;  they  may  have  too  many  em- 
ployees, or  be  too  liberal  with  credit,  thus  increasing  the  investment 
and  interest  on  net  worth  with  the  added  possibility  of  large  bad 
debts. 

Effect  of  Credit  on  Retail  Store  Prices 

Grain  quotations  secured  from  the  dealers  were  on  the  basis  of  the 
retail  cash  selling  price  per  sack  at  the  store.  It  will  be  recalled  that 
some  of  these  stores  were  on  a  cash  basis  while  others  extended  large 
amounts  of  credit  to  their  patrons. 

When  the  stores  are  arranged  according  to  the  percentage  of  an- 
nual cash  sales  along  with  their  respective  gross  margins,  it  is  seen 
that  store  credit  costs  money  and  that  the  trade  is  paying  for  it. 
(Table  20).  The  stores  on  practically  a  cash  basis  averaged  $.0990 
gross  margin  on  eveiy  dollar  of  sales.  The  stores  having  cash  sales 
ranging  from  35  to  65  per  cent  averaged  $.1200,  and  those  with  less 
than  35  per  cent  averaged  $.1270  gross  margin  per  dollar  of  sales. 

The  relationship  between  cash  sales  and  gross  margins  is  better  il- 
lustrated when  the  corn  prices  for  one  week  are  compared  wath  the 
percentage  of  yearly  sales  which  were  for  cash.  (Table  21).  The 
stores  which  were  doing  a  cash  business  sold  corn  at  an  average  price 
of  $2.17  per  c^^'t;  but  those  with  cash  sales  below  35  per  cent,  averaged 
$2.31  per  cwt.  for  corn.  These  differences  occurred  even  though  all 
stores  quoted  cash  prices.  This  shows  that  the  customers  obtaining 
store  credit  are  not  paying  in  full  for  the  service  rendered  because  the 


28 


N.  H.  Agri.  Experiment  Station 


[Bulletin  251 


cash  men  are  also  contributing  toward  the  cost  of  credit  and  are  pay- 
ing for  a  service  which  they  do  not  obtain.  An  almost  exactly  sim- 
ilar trend  could  be  shown  with  poultry  wheat  and  to  a  lesser  extent 
for  cottonseed  meal  and  gluten  feed.  On  the  other  hand,  opposite  re- 
sults were  obtained  for  bran  and  middlings;  there  was  a  difference  of 
$.07  a  cwt.  for  bran  and  $.01  a  cwt.  for  middlings  in  favor  of  the 
credit  stores.  Evidently  corn  and  wheat  are  used  as  leaders  and  are 
more  likely  to  be  changed  in  price  than  are  either  bran  or  middlings. 

T.\BLE   21 — Cotnparisons  of  A'o.  2   Corn   Prices  with  Percentage   of   Cash  Sales 


Price  for  Corn 

Percentage  Cash  Sales — Class  Limits 

per  Cwt. 

Less  than  35 

Week  Ending  Dec.  1,  192S 

90  to  100 

35  to  65 

$2.05 

2.10 

1 

2.15 

7 

1 

2.20 

1 

4 

2.25 

2 

3 

4 

2.30 

5 

4 

2.35 

2 

1 

2.40 

2 

2  45 

2.50 

1 

Number  stores  in  each  class 

10 

15 

13 

Average  price  per  cwt 

2.17 

2.25 

2.31 

As  more  credit  is  extended  by  the  stores,  the  cash  customer  pays  more  for  corn. 

CONCLUSIONS 

Because  cases  vary,  it  is  impossible  to  set  up  operating  cost  stan- 
dards and  say  they  are  attainable  by  all  stores  alike.  Conditions 
differ  between  stores.  The  location  of  buildings  as  well  as  the  ar- 
rangement of  buildings  and  equipment  and  other  factors  are  not  alike. 
What  might  ai)ply  to  one  case  would  not  to  another.  Furthermore,  it 
is  a  fallacy  to  assume  that  all  managers  of  the  41  stores  are  equally 
efficient  and  capable. 

Throughout  the  previous  discussions,  the  operating  expenses  of 
grain  stores  have  been  referred  to  under  fixed,  labor,  delivery  and 
other  costs.  The  stores  have  been  pointed  out  which  have  low,  medi- 
um and  high  costs.  Also  the  important  factors  w^hich  have  contributed 
to  their  size  have  been  presented  and  discussed.  All  of  this  informa- 
tion is  based  on  data  from  the  41  stores.  If  now  we  assemble  the 
lowest  cost  for  each  of  the  four  headings  from  the  41  stores  and  make 
up  a  composite  total  cost,  which  would  represent  the  most  efficient 
possible  method  of  store  operation,  we  find  the  following  costs  per 
dollar  of  sales:  fixed  $.0107;  labor  $.0352;  delivery  $.00;  other  costs 
$.0022,  a  total  cost  of  $.0481. 

Of  those  stores  having  delivery  equipment  which  is  used  only  for 
hauling  grain   from  the  car  to  the  store,   the   lowest  delivery   cost  per 


July.  19301 


Operating  Costs  of  Grain  Stores 


29 


O 


■TS 


o 
O 

«2 


o 


c 

•to 


o 
< 


A  vcrage 

(iross 

Margin 

$.1270 

.  1200 

0990 

Number 

of  stores 

in  each 

Class 

t^        CO        — ^ 

$.1800 
to 

$.1899 

r-4 

$.1700 

to 
$.1799 

T— <           1-H 

o      2 

^H           1—1 

ic  3  ^ 

1— (           1—1 

$.1400 
to 

$.1499 

1—1            ^-1 

03 

a 
O 

$.1300 

to 
$.1399 

01        CO 

a 
o 

o 

$.1200 

to 
$.1299 

01 

$.1100 

to 
$.1199 

CO      1—1      1—1 

c  3  —       "^1       '-'       t^ 

$.0900 

to 
$.0999 

1—1              1—1 

$.0800 

to 
$.0899 

^      CO 

$.0700 

to 
$.0799 

^       ^       Ol 

i. 

/o 
Class 
Limits 

Less  than  35.  .  . 
35—65 

c 
c: 

T-H 

c 
a 

EC 

o 


a 

o 


a: 
a;! 


a: 

a 

CO 


to 

C 

'5c 

c3 


02 

o 

a 


30  N.  H.  Agri.  Experiment  Station  [Bulletin  251 

dollar  of  sales  is  $.0011.  For  a  store  delivering  5  per  cent  of  the 
grain,  the  cost  per  dollar  of  sales  is  $.002.  This  ratio  increases  as 
the  amount  delivered  increases,  but  for  reasons  explained  in  the  pre- 
vious discussion,  it  is  impossible  to  state  the  net  cost  for  delivery. 

When  the  five  lowest  and  the  five  highest  combinations  of  fixed, 
labor,  deliveiy  and  other  cost  ratios  are  selected,  the  average  possi- 
ble costs  of  these  stores  show  extremes  of  $.0581  and  $.2009  per  dol- 
lar of  sales.  It  is  apparent  that  there  is  considerable  chance  for  im- 
provement. 

In  general,  the  results  obtained  from  tlie  survey  suggest  that  the 
managers  have  not  thought  of  their  business  in  terms  of  operating 
ratios  and  turnovers.  The  usual  procedure  followed  in  attempting  to 
reduce  costs  was  through  increasing  total  sales.  Although  this  is  con- 
sidered a  good  method,  it  is  not  the  only  way;  neither  is  it  certain  to 
reduce  costs.  Much  depends  upon  the  management  and  how  carefully 
the  costs  have  been  analyzed  and  the  gross  margin  budgeted,  whether 
or  not  the  business  will  show  a  profit  instead  of  a  loss.  There  are 
stores  where  readjustments  can  be  brought  about  with  the  present 
volume  of  business  operating  at  the  same  gross  margin  which  will 
show  a  profit  providing  the  flexible  costs  such  as  labor  are  reduced. 

When  sales  per  man  vary  $40,000,  it  would  seem  that  either  more 
business  should  be  forthcoming  to  some  stores  or  the  number  of  peo- 
ple employed  reduced.  Further  study  should  be  made  of  the  labor 
distribution  in  the  efficiently  operated  stores  where  there  are  low  labor 
costs  per  dollar  of  sales  and  high  average  yearly  sales  for  those  em- 
ployed. The  limited  amount  of  information  on  this  subject  given  in 
this  report  indicates  that  there  are  possibilities  of  checking  on  the 
reasons  for  the  great  differences  in  labor  costs  between  stores.  Fur- 
thermore, labor  costs  usually  constitute  over  half  the  total  costs  and 
are  flexible  whereas  many  of  the  other  costs  are  not  so  easily  changed. 

Grain  dealers  appreciate  that  they  are  not  bankers  and  many  wished 
they  were  on  a  cash  basis.  In  fact  they  considered  credit  their  worst 
problem.  The  amount  of  information  at  hand  shows  the  cash  stores 
do  have  an  advantage.  They  had  lower  costs,  took  smaller  margins 
and  sold  grain  at  a  lower  average  price  than  those  extending  credit. 

Basing  final  opinion  on  the  data  presented,  there  is  no  doubt  but 
that  considerable  variation  does  occur  in  the  operating  costs  of  grain 
stores  as  well  as  in  the  selling  prices  of  feed  and  grain.  It  has  been 
pointed  out  that  some  of  these  costs  are  flexible  so  that  they  can  be 
changed.  In  other  words,  there  are  opportunities  to  reduce  costs  in 
many  stores  and  bring  about  a  greater  net  profit  as  well  as  to  reduce 
the  gross  margin  or  the  part  which  the  fanner  pays  to  the  dealer  for 
his  services. 


July,  1930J 


Operating  Costs  of  Oraix  Stores 


31 


X 

o 

Urn 

Per 

Dollar 

Sales 

+  or  — 

0  re  0  c  CO  c  —  c:  —  'e  re  —  C  0  —  re  M  ei  CO  M  le  —  CO  0  CO  0:  X  X  le  0 1^  c^i  -H  0  le  0  'e  -r  —  M  -^       1 
»te  w  —  c  •—  —  -r  r- 1~  —  oc  —  cu-  re  c  '.e  -p  '.e  c  X  05  CO  ei  05  ei  c'j  X  CO  i^  0  'e  t^  .-H  X  re  r:  05  ot^  >.e 
ce  re  3  CM  « '.e  oc  ej  CI  CM  -—  X  —  c  M  c  ^  C  ^  ^  re  0  c  -^  0  c^i  CO  t  M  re  '0  CM  0  X  -f  CM  0  ^  c-i  c  ^ 

oocooocoooooooooooooooooooooooooooooooooo 

1  +++  1  +  1  +++++++  1  1  +++  1  ++  1  +  1  +  1  +++  1  1  -f+ 1  ++++  \  1 

1  + 

—  $632.00 

+722.47 

+.52.63 

+625.65 

—404 .  53 

+  1,807. 50 

—3. 8.58. 50 

+  1.101. 52 

+  1.. 506. 53 

+  1.. 529. 77 

+  1.242.44 

+5.3.'}5.00 

4-788.86 

+487.45 

-1.749.40 

—48.41 

+  1.272.97 

+2.. 595. 82 

+  1.351.32 

—896.24 

+3,698.64 

+883.37 

—679 .  1 1 

+  1.203.80 

— 9(J3.47 

+2.371.05 

-6 .  589 .  IS 

+5.388  t)5 

+3. 127. .33 

+4.452.76 

—6 ,  300 .  87 

—3,353.12 

+963.19 

+  11,158.97 

-6,899.90 

+3,334.50 

+472.06 

+5,. 3.38.. 53 

+3,8(19.36 

—  1.467.96 

-11.916.90 

1 

o 

o 

Per 

Dollar 
Sale.s 

—  xooooocoi^  —  'rx-^'ecot~^xt~'r'>'05t^-r-T-fret^-TCC«x-ri.ecico  =  cco-i< 
■e  CO  c  -<  CO  r-  0  0  —  -o  05  -H  0  CD  '.e  05  re  X  ro  re  re  X  —  re  re  re  X  -r  X  1-  0  'e  r5  oj  —  'O  re  0  '-e  'O  re 
— 'corot^  —  >-eo2ccre'i<xxCMi~X-<cre  —  oor~CMCOOXt^05rexci^i0OO'-ce'rt~C; 

—  -^-^ -H^  —  0'--<-<3"-h00.-  —  ->  —  —  —  O^-H  —  —  0  —  0  —  O-hO  —  '-■^  —  ""0« 

M> 

2 

$2, 07 3. 50 

3 . 989 . 35 

3 . 87 1 . 35 

5. 301. 52 

4.015. 00 

5.. 500  00 

3.720.66 

7.032  74 

7.322  72 

9  ,  1 35 .  ,54 

5,761.69 

12.00000 

8.0.54.09 

4.975.79 

6.449.46 

9 .  753  .56 

8.64(1    13 

11.632  80 

9.834  40 

9 . 060  30 

9.937.22 

7.789  24 

12.013.85 

10.3.86.46 

10,414  37 

10,719.34 

9.  24  8.. 86 

19. 371. 57 

11,6.'«1.25 

16.741.74 

9.. 892.  00 

13.991.87 

10.1.59.00 

22.000.00 

14.408.71 

15.. 599.  69 

1 7. 361, 52 

23. (139.  79 

28,0(X).00 

15.. 383. 97 

82.359.26 

§ 

Q 

Per 

Dollar 
Sales 

1.501 
1.365 
1290 
1510 
127(1 
10.50 
18.50 
1330 
1046 
121(1 
0701 
1007 
lOSl 
0035 
10S7 
1200 
()XS2 
134(1 
09S1 
11.3(1 
0649 
0698 
12,S3 
0914 
1130 
0SO.5 
1511 
12.59 
0719 
1000 
1307 
i:503 
0(1(17 
0784 
1.500 
0820 
1101 
110(1 
1249 
0828 
1192 

- 1 

3 
< 

$2,705  .50 

3.2(1(1  88 

3,818,72 

4.675,87 

4. 4 19. 53 

3,692  ,50 

7.. 579,  16 

5.931    22 

5,81(1    19 

7,605,77 

4,519  25 

6.(165.00 

7.265  23 

4,  18S,34 

,S,  198  .S6 

9.. SO  1,97 

7.373,  1(1 

9.036,98 

8.483,08 

9.9.5(1  .54 

6 , 238 , 58 

6.905,87 

12.692,96 

9.  182,(10 

1 . 377  84 

8.348,29 

15.83S.04 

13.982  92 

8,. 508,  92 

12.2,88,98 

16, 192. 87 

17,344   99 

9,195  81 

10,, 841   03 

21..'«)8  61 

12.265   19 

1 6 . 889  46 

18.301   26 

24.1.'iO  (14 

16.851,93 

94,276.16 

Per 
Dollar 
Sales 

$ ,  0(J44 
0117 
,  0220 
0100 
.0121 
Ol.'JO 
.0709 
.0300 
01 65 
.0109 
.0032 
,0128 
,0131 
,0111 
0209 
O170 
,0049 
0317 
O099 
,0227 
,0022 
,00(12 
0143 
.0049 
.00.50 
.0080 
O300 
01.50 

0229 
01(10 
01 73 
01. S2 

0052 
.  0286 
.  0367 

0170 
.0111 

0200 
.01.50 
.0105 
.0161 

Amount 

$.80 ,  00 

281,27 

673  37 

310  00 

420  31 

460  00 

2 .  90.'{ ,  38 

1 ,  .307   38 

918  24 

681. 53 

206,00 

8.50  00 

884 , 48 

786,49 

1.. 581   37 

1 ,  398 ,  .50 

411   28 

2.6.57  02 

861   27 

1,989,64 

213  90 

617  33 

1,416   12 

499   10 

500,82 

835.92 

3.142.53 

1.672. 30 

2.715.13 

2,034.07 

2.145.02 

2.421.64 

721   70 

3. 951. 57 

5.218  44 

2,. 536. 05 

1.745  93 

3 , 596  09 

2.895   14 

2, 144, 59 

12,753.64 

C 

O 
>. 

> 

Per 
Dollar 
Sales 

^  —  0  —  0  —  C  re  « -H'e  0      t^OM-eeie)          re  re  s  t»  x  ci      siei^re      —  oootxo 
05  CM  CO  re  X  i-e  CO  X  M  -H  Tf  ^      'p  t^  t-  0  w  o          -0  —  X  M  x  -r      co  x  o  re      co  cj  -j-  -^  —  05 1^ 

o^-H  —  ocMe)OCMOO-H      —.00—1—'-'         — -HOC  OS      — Oreo      — ocm-x^-oo 
oooocooooooo     000000        000000     0000     ooocooo 

«l. 

3 

*  224. 88 

345. 15 

.500  00 

451  00 

281  00 

1 , 028  34 

1,175  85 

461    91 

1,386    19 

75.00 

300  00 

944 . 05 

1,104  21 
566  5,3 
597  04 
881    23 

1,486  68 

892  44 

1   05 

1.617   77 
1.131    13 
806  08 
276  94 
925.32 
470.73 

1.917.03 

1 . 055  56 

4. 083. 55 

458.76 

2.293  45 
374   20 
3,(170  31 
209  99 
2 , 206 . 50 
1,996.85 
5.908.51 

.4^ 

o 

3 

Per 

Dollar 

Sales 

$.1052 
.0894 
O740 
.07.50 
Oddl 
0.590 
,0698 
,  0570 
,  055 1 
.  0552 
.0425 
04  (19 
.0(139 
.  0392 
.  0.582 
.0.590 
.0.549 
.03,89 
04  12 
.0405 
.0428 
0499 
.07(13 
.  0524 
.0.551 
.0427 
.0(114 
.0602 
.  0352 
.  0490 
.  Od.52 
.  0(1.57 
.0410 
.0391 
.  0598 
.  0500 
.0(101 
.0440 
.0422 
.0492 
.0712 

< 

$1,895.00 
2,137.85 
2.  191  00 
2.320  00 
2.  299  00 
2.0(10  00 
2.860.00 
2.. 570.  55 
3,063.47 
3 , 449 . 50 
2 . 736  00 
3.10000 
4 . 284 . 50 
2 .  765  38 
4.386.65 
4.780  .50 
4.591    18 
3.266  .50 
3,. 560  25 
3.. 548  01 
4,108  80 
4, 930  00 
7 , 538  50 
5,260  92 
5,. 54 5  29 
4,428.86 
6,434   33 
6 ,  679  00 
4,165  23 
5,920.26 
8,063  80 
8,749.39 
5. 725  05 
5.400  83 
8.481   23 
7,404  76 
9. 190. 50 
8.036.64 
8,1.50  00 
10.0(J5.91 
.56,366.56 

o 

Per 
Dollar 
Sales 

$.0405 
.  0260 
.0210 
.  0.500 
.  036 1 
.  0250 
.0192 
.0200 
.0247 
.0334 

0233 
.  0365 
.0171 
.0132 

0149 

0370 
.0212 

0535 
.0298 
.0402 
.0199 
.0137 
.0214 
.0228 
.0449 
.0271 
.0509 
.  0465 
.0138 
.0190 
.0397 
.0157 
.0166 
.0107 
.  0374 
.0130 
.0149 
.  035(1 
.  0.5(13 
.0133 
.0244 

-rt 

$7:50  .50 
(122  88 
609.20 
1.. 54 5   ,87 
1 . 249   22 
891    .50 
787.44 
877.44 
l,;i72  57 
2. 088., 55 
I,. 502.  25 
2.415.00 
1.1.52.20 
936  47 
I,  126  (13 
3.0.56  44 
1.773  (16 
2,232  23 
2,, 574  88 
3,526  45 
1,914.83 
1,3.58. 54 
2. 120. 57 
2,291   51 
4,525.65 
2, 80(1.. 57 
5.335.8(1 
5.  160.89 
1,628  .5(1 
2,417  (12 
4,928,49 
2,090  41 
2,290.30 
1,488.63 
5,315.49 
1,9.50.18 
2.282.72 
6.4.58  54 
10.879  00 
2,704.58 
19,247.45 

03 

$18,000.00 

23,910  23 

29.610  22 

30.967   30 

,34,. 587  00 

35.00000 

40.924.62 

43,812.86 

.55.. 59 1.0(1 

62.495.35 

64 . 377 . 48 

66.000  00 

67.037.34 

70.522.09 

75.3.52  .56 

8 1,467  00 

83,618  31 

83 ,  764  .  .59 

86.4.57  97 

87.621   46 

96,104.60 

98 , 625  70 

98 . 686 . 03 

100,449.31 

100,719.25 

103.(168.64 

104.700  .53 

110.. 8.53.  32 

118.247   14 

122.608.99 

123,631   74 

133,017  94 

137,. 507  00 

1.38,000  00 

141,873  51 

148,0.30  22 

1.52.724  40 

180,962  59 

193.000  00 

203,330.63 

791,1,59.27 

Store 
Num- 
ber 

I^cTX'N'Nl-'eooo.-0'^05'ncD^^t--lOOl050oc5c>5'CcoTt<t^C5XXr;3'^~S=g■^X'*2?^2SS 

'^5Sc5^o5    ccoio>oxx    CO  o5  (N  Tj.  rt  CM  CM  o5    1^  ^  ^  t;  2  z  2  2    22  —  2    2S«    2 

Fixed  Cost 
Labor  Cost 

DELIVERY  Co5r 


wm  Other  costs 


.:^:■v;^:>\:A^v^'-\y^^:^■JAi^V:■:■t■/V.^v.■.■::;..^ 


1     Z    3    4    9    6    7    e    9    10  11    IZ  13  14  15  16  17 

Total  Co 5T  per  Dollar  of  5ale5    (In Cents) 

Fi^.    1.     Distribution    of    operating    costs    of   41    grain   stores. 


18  19 


I  i 


■■iiiilli;    I 
m-  iiiii! 


liiiiii: 


I 


iiiil 


Iliili 

ifiiiil 


•'',<',• 


i  It