Accounting for milk distributing companies;

              82 HASKINS & SELLS September
Accounting for Milk Distributing Companies
BY F. H . SANFORD, of the New York 39th Street Office
THE business of distributing milk has
within the past few years been the
subject of numerous investigations, official
and otherwise, due principally in the begin-ing
to the strenuous objection on the part
of the public to the steady advance in the
price of the commodity. One result of these
investigations has been to change the
status of the industry from a private to a
semi-public character, somewhat compar­able
with power, light or coal companies.
It seems probable, considering the great
importance of milk and its by-products,
butter, cheese and cream, as articles of
human diet, and the relationship between
the milk supply and the health of the
children in a community, that the trend
toward public regulation of the industry
will continue. A sufficient supply of pure
milk at fair prices is necessary to the
health and comfort of the community.
What constitutes a fair price, whether the
subject be considered from the point of
view of the distributor or the regulating
authority, must be determined from an
accurate knowledge of the original cost of
the milk, plus the costs incidental to its
distribution. What these costs are can
best be determined from an adequate
system of accounts, properly kept. While
most of the larger companies have such
systems, enough others do not to make
the preparation of a comparative state­ment
of the costs of several companies
operating in the same territory far from
a simple matter. The accountant, there­fore,
should be fully informed as to the
progressive stages of purchase and distri­bution
to the end that he may so conduct
an examination as to ascertain the costs of
these operations, or, in the case of a system
engagement, so design the accounts and
records that these costs may readily be
determined, and the selling price of the
commodity accordingly justified. The fol­lowing
statement of sales, cost and profits
is the form used by the several large dis­tributors
as evidence submitted at a hear­ing
before the Milk Committee of the
United States Food Administration, for
the purpose of fixing the prices for bottled
grade " B " milk in New York City for the
month then ensuing.
EXHIBIT " A"
COUNTRY, BOTTLED—RETAIL:
Quarts sold,
Sales,
Cost—Schedule No. 1:
Up to delivery,
Delivery, etc.,
Total cost,
NET PROFIT,
EXHIBIT " A"
SCHEDULE NO. 1
Amount per quart
QUARTS SOLD,
COSTS UP TO DELIVERY,
Purchases,
Country—Can station expenses,
Country—Factory expenses,
Freight and ferriage,
Hauling—City,
City factory expenses,
Depreciation.
Total,
COSTS OF DELIVERY, ETC.:
Branch operation and maintenance,
Delivery expenses,
General, selling and administrative ex­penses,
Depreciation,
Deduction from sales,
Shrinkage,
Total,
TOTAL COSTS,