ACCOUNTS.

The special features of mine accounting reports which are a development to meet the needs of this particular business are the determination of working costs, and the final presentation of these data in a form available for comparative purposes.

The subject may be discussed under:—

1.Classes of mine expenditure.
2.Working costs.
3.The dissection of expenditures departmentally.
4.Inherent limitations in the accuracy of working costs.
5.Working cost sheets.

In a wide view, mine expenditures fall into three classes, which maybe termed the "fixed charges," "proportional charges," and "suspense charges" or "capital expenditure." "Fixed charges" are those which, like pumping and superintendence, depend upon time rather than tonnage and material handled. They are expenditures that would not decrease relatively to output. "Proportional charges" are those which, like ore-breaking, stoping, supporting stopes, and tramming, are a direct coefficient of the ore extracted. "Suspense charges" are those which are an indirect factor of the cost of the ore produced, such as equipment and development. These expenditures are preliminary to output, and they thus represent a storage of expense to be charged off when the ore is won. This outlay is often called "capital expenditure." Such a term, though in common use, is not strictly correct, for the capital value vanishes when the ore is extracted, but in conformity with current usage the term "capital expenditure" will be adopted.

Except for the purpose of special inquiry, such as outlined under the chapter on "Ratio of Output," "fixed charges" are not customarily a special division in accounts. In a general way, such expenditures, combined with the "proportional charges," are called "revenue expenditure," as distinguished from the capital, or "suspense," expenditures. In other words, "revenue" expenditures are those involved in the daily turnover of the business and resulting in immediate returns. The inherent difference in character of revenue and capital expenditures is responsible for most of the difficulties in the determination of working costs, and most of the discussion on the subject.

Working Costs.—"Working costs" are a division of expenditure for some unit,—the foot of opening, ton of ore, a pound of metal, cubic yard or fathom of material excavated, or some other measure. The costs per unit are usually deduced for each month and each year. They are generally determined for each of the different departments of the mine or special works separately. Further, the various sorts of expenditure in these departments are likewise segregated.

In metal mining the ton is the universal unit of distribution for administrative purpose, although the pound of metal is often used to indicate final financial results. The object of determination of "working costs" is fundamentally for comparative purposes. Together with other technical data, they are the nerves of the administration, for by comparison of detailed and aggregate results with other mines and internally in the same mine, over various periods and between different works, a most valuable check on efficiency is possible. Further, there is one collateral value in all statistical data not to be overlooked, which is that the knowledge of its existence induces in the subordinate staff both solicitude and emulation.

The fact must not be lost sight of, however, that the wide variations in physical and economic environment are so likely to vitiate conclusions from comparisons of statistics from two mines or from two detailed works on the same mine, or even from two different months on the same work, that the greatest care and discrimination are demanded in their application. Moreover, the inherent difficulties in segregating and dividing the accounts which underlie such data, render it most desirable to offer some warning regarding the limits to which segregation and division may be carried to advantage.

As working costs are primarily for comparisons, in order that they may have value for this purpose they must include only such items of expenditure as will regularly recur. If this limitation were more generally recognized, a good deal of dispute and polemics on the subject might be saved. For this reason it is quite impossible that all the expenditure on the mine should be charged into working costs, particularly some items that arise through "capital expenditure."