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( w a m n Mi wna , “* fV {?, ff. C0r mS ?a3M>V fo&fs Omaha - April SS, 1950 704-35 Mr. Wm. Reinhardt - Los Angeles (CC-Mr. W. H. Hulsizer) This refers to your letter of March 3, 1950, file 1-7334, to MT. Hulsizer, and his letter of March 30, 1950, file 3703-1, to me, with copy to you, and supplements my let­ter to you of April 13, 1950. There are attached two statements showing details of the elements of cost that were capitalized under two repre­sentative LA&SLRR Go. work orders, such as material, labor, sundries, indirect costs, etc*, as requested in item A-IXI - Charges Reflected in Capitalized Plant Additions. The various labor and material items represent the actual cost thereof to the LA&SLRR Co. The percentages shown for Material Store Expense represent the estimated cost of handling material at material yard or storehouse and of loading for shipment to the job. These percentages are based on the ratio of the total esti­mated cost of handling material to total estimated cost of is­sues for the month in which used. The percentage covering Purchasing Expense is ap­plied to material purchased for and shipped direct to the job without intermediate handling at material yard or storehouse. This percentage is based on the ratio of estimated purchasing expenses to estimated total purchases for the month in which purchased. Each of the details attached include an amount representing 3# of the direct labor charges which has been added to cover the use of tools, under practice in effect at that time. The tools used on the work are not charged directly to that job but are charged to operating expenses. This per­centage represents the approximate relationship of the cost of «maii tools to direct maintenance and addition and betterment labor. As information, effective January 1, 1946 we dis­continued charging the investment account with such approxi- » mate amounts representing the use of tools. Instead, since J jjt1' that time and presently, it is our practice on large jobs to charge the cost of the tools to the job on which used and to VT j'. credit the appraised value thereof upon completion of the work. 5’ 1950 0n sman jobs, a charge to the investment account for use of tools is not made.