INTRODUCTION AND GENERAL NOTES 
which are necessary to manufacture or to care for the article 
pending the time of sale. 
The operating costs of the business. 
The depreciation of the plant or the replacement require- 
ments thereof. 
The profit which it is desired to make. 
When these elements are known and a proper analysis of 
operating cost has been made the prudent business man will 
distribute his fixed elements of cost, such as management, de- 
preciation and the like with a view to making the price of the 
article or the charge for the service which he renders, attractive 
to his customers. 
In a large machine works where the charges for repair work 
appeared unusually high, it was found upon investigation that 
overhead expenses were unequally distributed to new and to 
the repair work. This was done in order that new work which 
had to be obtained in competition with other concerns could be 
taken at lower figures. While this is only an isolated example, 
it shows the importance of being in a position to analyze costs 
in order that charges may be fixed low enough to secure business 
and yet high enough to yield an adequate profit. 
Reference to the Tables in this Volume. — As an aid to the 
appraisers of industrial and public utility properties, this volume 
would fail in its purpose without tables containing information 
relating to the probable term of service and the expectancy of 
the articles in common use in such establishments or plants and 
also interest and annuity, amortization and depreciation tables. 
The amortization and depreciation table not only covers a 
range from 2-year life to 75-year life, but it has been so arranged 
that the remaining years of service, instead of age, can be made 
the starting point when it is desired to enter the table for present 
value and the so-called current rate of depreciation. 
While such tables and explanations as are furnished in this 
volume are generally applicable they have been prepared, as 
stated, with special reference to the requirements of appraisers 
and of the public service commissions and of other rate-fixing 
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