Costs

“ How Cost of Production and Cost of Acquisition are Equalized.—The costs of moving goods from place to place—including in these costs commercial charges and duties imposed by governments—are the cause of most of the manufacturing that is done in the region represented by the left side of the diagram, except the production of such articles for immediate or local consumption as are necessarily made at or near the places where they are used. ”

“ When all goes well, the costs are about the same as in growing apples, while the profits are somewhat greater. [23] But with blight to contend with, most of the economic factors are inconstant, and calculating costs and profits is guessing pure and simple. ”

“ I say property of ours, meaning of the suit’s, but I ought to call it the property of costs, for costs is the only power on earth that will ever get anything out of it now or will ever know it for anything but an eyesore and a heartsore. ”

“ Hence the business man's view of the costs is that they determine value. It is true in the sense that the supply of a particular product in any market is at last limited by cost of marginal producers or of marginal portions of supply. But it is not true of all the units of product that costs determine, or equal, market price. There is a margin above costs to the successful enterpriser on a large portion of his output. ”

“ Much of their reasoning goes no farther than to explain one price in terms of other prices. If we attempt to explain the money price of a finished product in terms of the money prices of its raw materials and other money costs of prices of production, it is clear that we merely shift the problem. We have still to explain these antecedent prices. ”

“ Direct costs are sometimes called prime costs. The cost elements which can almost invariably be applied directly to the product are material and labor. The sum of these two items constitute, therefore, the prime or first cost of the product. The other items of cost which are incurred in the factory or with which the factory is chargeable are variously called factory expense, overhead, or burden. These indirect costs cannot be charged directly to any specific product, and so they are shared by the entire factory output. ”

“ In answer to these various arguments the free traders, or those desiring a modification of present high rates, make their main appeal to the doctrine of comparative costs. Briefly stated this asserts that nations, like individuals, can do some things better than others. ”

“ These are the "variable costs," and they have to be further classified, since some of them do not increase as rapidly as the business grows, while others increase with the same rapidity as does the business. ”

“ On the other hand, many students of the problem view the depreciation charge as incurred for the sole purpose of determining the correct costs of doing business. Unquestionably, depreciation is a cost of production. A portion of the service life of equipment goes into each unit of the product, and depreciation constitutes a cost which must be borne by the product with as much reason as the labor power that fashions and forms it and the raw material out of which it is made. ”

“ In general, the quantity theorist thinks that he has reconciled his theory with cost theory by pointing out that reduced costs manifest themselves in increasing production, which means increasing trade, which should, on the quantity theory, mean lower prices. ”

“ A great majority of those who advocate valuation say that they should be based on the cost of the service. The proper method, then, would be to ascertain the exact cost of hauling each commodity and then base rates on these ascertained costs, making them just high enough to allow the road a fair return. ”

“ To avoid the popular error of attributing an increased cost of living to all persons under a regime of rising prices, and to reveal the actual effect of prices on costs, it is necessary to determine whether the majority of the population is included among those whose incomes have failed to respond to advanced charges or among the beneficiaries of high prices. ”

“ Buying Expense. The costs incurred in making purchases for the business. These may comprise the salaries of buyers and all expenses in connection with maintaining a purchasing department.
Rent. The cost for the use of premises not owned.
Plant Maintenance. The cost of upkeep, repairs, and so forth, on the plant used by the business. The cost, by purchase or manufacture, of light, heat, and power is included here.
Depreciation. The decrease in value of a fixed asset due to wear and tear, lapse of time, obsolescence, etc. ”

“ The value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labor which it enables him to purchase or command. Labor, therefore, is the real measure of the exchangeable value of all commodities.
The real price of everything, what everything really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. ”

“ We spend our incomes for paint and paper, for a hundred trifles, I know not what, and not for the things of a man. Our expense is almost all for conformity. It is for cake that we run in debt; ’tis not the intellect, not the heart, not beauty, not worship, that costs so much. Why needs any man be rich? Why must he have horses,{236} fine garments, handsome apartments, access to public houses and places of amusement? Only for want of thought. ”

“ If there be more money than is sufficient to satisfy execution. Sect. 457. If, on any sale made as aforesaid, there shall be in the hands of the sheriff or other officer, more money than is sufficient to satisfy the writ or writs of execution, with interests and costs, the sheriff or other officer shall, on demand, pay the balance to the defendant in execution, or his legal representatives. ”

“ If the notice of acceptance be not given in the period limited, the offer shall be deemed withdrawn, and shall not be given in evidence, or mentioned on the trial. If the plaintiff fails to obtain judgment for more than was offered by the defendant, he shall pay the defendant's costs from the time of the offer. ”

“ In all cases when the property has been delivered to the plaintiff, where the jury shall find for the plaintiff, on an issue joined, or on inquiry of damages upon a judgment by default, they shall assess adequate damages to the plaintiff for the illegal detention of the property, for which, with costs of suit, the court shall render judgment for defendant. ”

“ Fixing the price of the goods is important. Make it high enough to cover all expenses and give you a fair return for your labor. The expenses will be the fruit, sugar, fuel, jars, glasses, boxes, packing material, wear and tear of utensils, etc., transportation, and commission. The commission will probably be 20 per cent of the selling price. It may be that a merchant will find that your prices are too high or too low for his trade, or he may wish to purchase the goods outright. ”

“ By cost to make is meant full cost, which includes materials used, labor applied, and a fair share of the overhead expenses. Whatever the cost to make, whether lower or higher than the identical equipment could be purchased for on the market, that represents the capital outlay and is the true basis for valuation, taking cognizance of depreciation for the elapsed period. ”

“ If we attempt to ascertain the changes in the cost of production of any commodity from the changes in its money price, the conclusion will require to be corrected by the best allowance we can make for the intermediate changes in the cost of the production of money itself. ”

“ With respect to the first of these propositions, it may be observed, that the cost of any article to the purchaser includes, besides the ratio of the supply to the demand, another element, which, though often of little importance, is, in many cases, of great consequence. The cost, to the purchaser, is the price he pays for any article, added to the cost of verifying the fact of its having that degree of goodness for which he contracts. ”

“ The cost of promoting the enterprise, the discount on the hazard, the loss of interest during its infancy, the labor of building up the undertaking—these are all real elements of cost, and may remain in the property as value, but, like all other items of cost, they have their reasonable limits, which, in each individual case, can be determined within narrow bounds. ”

“ Few women when they assume the care of a household know the exact value of the household plant; the amount to be deducted each year for wear and tear; the relative proportions expended annually for rent, fuel, food, clothing, and service; the number of meals served and the approximate cost of each; the amount of profit, waste, or unproductiveness that results from all expenditures made. Every manufacturer, every business man knows the value of his plant, its increasing or diminishing value, the cost of materials used and of service employed. ”

“ Of course, having not even money, we still less have credit. All estimates deal directly with the real things, the flour, iron, wood, wool, and labor, of which money and credit were for you the very misleading representatives. In our calcula- tion of cost there can be no mistakes. Out of the annual product the amount necessary for the support of the people is taken, and the requisite labor to produce the next year's consumption provided for. The residue of the material and labor represents what can be safely expended in improvements. ”

“ To-day, however, these contributions, which occur every year, are booked either to the general expenses account or the wages account—for they are, in fact, a part of wages—and they are naturally calculated as part of the cost of production, and eventually appear in the price of the goods, though perhaps not to the full extent in times of bad trade. ”

“ In other lines of business, commonly occupied with the production of staple goods, this constituent of cost may perhaps fall below ten per cent of the total. Where the average, for the price of finished goods delivered to the consumers, may lie would be a hazardous guess. ”

“ In this very dynamic aspect of modern life, one observes a tremendous increase in demand for the costly and enervating indulgencies of conspicuous expenditure and a more than proportionate decrease in the productive powers which contribute to the synchronous supply of the staples of life. Here, indeed, resides a fundamental problem in national cost accounting. ”

“ With these explanations the proposition holds good that the normal values of freely produced commodities tend to be equal to their cost, or rather expenses, of production, and any price which yields a greater or less return to labour and capital is unstable. ”

“ If the mean term, which we are searching for, between an infinite value and no value at all is expressed in the case of every product, by the amount of time and expense which the product cost, a poem which has cost its author thirty years of labor and an outlay of ten thousand francs in journeys, books, &c., must be paid for by the ordinary wages received by a laborer during thirty years, plus ten thousand francs indemnity for expense incurred. ”

“ Cost of Production properly represented by sacrifice, or cost, to the Laborer as well as to the Capitalist; the relation of this conception to the Cost of Labor. § 5. When profits vary from Employment to Employment, or are spread over unequal lengths of Time, they affect Values accordingly. § 6. Occasional Elements in Cost of Production; taxes and ground-rent. Chapter III. Of Rent, In Its Relation To Value. § 1. Commodities which are susceptible of indefinite Multiplication, but not without increase of Cost. Law of their Value, Cost of Production in the most unfavorable existing circumstances. ”

“ Now these rates of wages and profit can be expressed in terms of money, and may be designated, Expenses of production. following Marshall, the expenses of production as distinguished from the real cost. The real cost of production would on analysis consist of a confused unworkable mass of “efforts and abstinences,” or “disutilities,” and the relation of these mental strains to their material rewards is the problem of wages and profits. But for the purpose of relative values it is not necessary to push the analysis so far ”

“ The expense of feeding the Poor will be provided for by selling the portions of Food delivered from the public kitchen at such a price, that those expenses shall be just covered, and no more:— so that the Establishment, when once completed, will be made to support itself. ”

“ The really practical problem is still before us in trying to analyze the forces at work fixing prices in that vague and dangerous margin between actual expenses of production and the prices in fact paid by the consumer.... ”

“ Moreover, the settled prices prevailing throughout the country allow of assured calculations and precautions as to business ventures, and permit such a ratio to be established between expenses and income, that at the end of the fiscal year a profit, not a loss, may be counted upon. ”

“ Obviously what is an ordinary expense of a given business must depend upon the nature and scope of the business, the nature and occasion of the expenditure, and other considerations which will emerge in each specific case. ”

“ A larger proportion of the expenses of production goes for the purchase of equipment and raw materials, and a smaller proportion—though perhaps an [Pg 426] absolutely increased amount—goes for the purchase of labor power. ”

“ If ye keep your expenses as at present, and increase your sales, all the profit on the excess business above your quota is porridge. Ye dinna hae to pay any additional amount for rent, taxes, heat, light, depreciation, advertising, or insurance. In other wor-rds, your operating expenses on all business, over and above your sales quota, are reduced by these items. This saving would reduce your operating expenses eight per cent., meaning that this excess business over your quota would only cost ye twelve per cent. to secure, instead o' twenty per cent. ”