nuts, bolts and things of that kind. The plan has worked out very satisfactorily, and I think the main reason was that we put the proposition squarely up to the Stores Department men. the men handling the material. If they cannot keep a proper record of it, the Accounting Department surely cannot, since it is in some cases 50 miles away.

MR. PROCTOR D. RENSENHOUSE, Three Rivers, Mich: Mr. Waite of the Middle West Utilities Company, asked me to present this question: What general practice is being followed in taking care of the overhead on new construction work? Is it the practice of member companies to make direct charges for overhead expense against new construction work, or do they cover this overhead against Investment on a percentage basis, either by indirect charge, or by some other method? To put it differently, do they charge any portion of general office expense or general office salaries directly against new construction work, or are such charges against Investment made indirectly on some arbitrary basis? In having new construction work done by a construction company, is it the practice to add any fixed percentage to cover their own overhead into the new construction?

MR. DEDRICK: I have had very much the same problem confronting me within the last few months, and it was finally decided, with the approval of the Auditors of our organization, to capitalize the time devoted to construction work by certain members of the company organization. I will qualify that by saying that the time of men engaged directly on construction work is directly chargeable to the construction job, such men as the chief engineer, his assistants and various construction men; but the overhead of the organization-the Accounting organization, for instance, including the Auditor, the assistant to the Auditor, and the various heads of the Accounting Department who are engaged in handling accounts payable, etc.-is charged to Construction, depending upon the total amount of work applicable to construction that passes through their hands

We made out a complete schedule which took in every employee of the Executive organization, including the Purchasing Agent, the Storekeeper and the Auditors' Departments, and we finally arrived at a figure which was approximately $1000 a month, and covered the entire time of our organization devoted to construction work. We are now capitalizing that

amount each month, dividing it over each construction job pro rata on the total that each construction job bears to the total of the construction work done during the month.

MR. RENSENHOUSE: Do you arrive at that figure by having those individuals keep a time card?

MR. DEDRICK: We do not use time cards, as we have something like 70 men and if each man made time cards for even fifteen-minute periods, he would be turning in dozens of such cards a day. My personal time would be devoted to signing construction checks, along with my other duties, and the amount of my time devoted on an average to construction, has since been charged to construction jobs. The figures are not arbitrary, however. We hade them by a time study extending over a period of several weeks. The figures were arrived at after an exhaustive study of each man's duty. If we find that our construction work drops off so as to permit the members of the organization to devote their time to other duties, this schedule. changes just that much. It is subject to change at various times. of the year. For instance, during the winter months, when we have very little construction, our schedule is completely revised. That would take place about the middle of November.

MR. RENSENHOUSE: I would like to ask Mr. Dedrick what the percentage of his construction expenditure for the overhead amounts to, roughly.

MR. DEDRICK: It all depends upon the amount of construction work. Some months it would run 1⁄2 and some months it might be 4 of 1 percent. During some months we have done. $350,000 worth of construction and the total amount charged to overhead has been something less than $1000, a little more than three mills, three and a half mills.

MR. RENSENHOUSE: Our practice is to charge to Investment each month a fixed and arbitrary percentage of the current month's expenditures on new construction, to cover all overhead, and there are no direct charges of general office expenses. or salaries against Investment.

MR. C. C. MCBRIDE, Pittsburgh: It is our policy to distribute the time of every man as far up in the organization as possible, charging it to the exact work that he is busy over, but when we get up into the office and administrative forces it is almost impossible to do that, so we take a certain percentage of

our general expense and charge it against construction. At the present time we are using 10 percent, although we are in doubt as to the correctness of that figure: The fact is, we have not made a thorough study into the matter, but we are inclined to think that 10 percent is low, and I was somewhat surprised to hear that the gentleman from Youngstown uses a percentage as low as 1⁄2 of 1 percent. Our figure, of course, includes not only the percentage of time, but also office expenses, telephone expenses, and all kinds of general overhead expenses. It is almost impossible to tell what percentage of the telephone service should be charged to construction and operation where it is used in a combination office or in a general office, and that raises a question in my mind. If you use a fixed percentage which is prorated or charged out against your construction work, what do you credit that to? To your expense account? Suppose that in one month you have four times as much construction as you have in the next month, the credit to your expense will be less or more as those expenses go up. How do you control your expenses?

MR. RENSENHOUSE: There will be that variation from month to month.

MR. MCBRIDE: Yes. You would rather have that variation than a fixed amount charged off.

MR. RENSEN HOUSE: Well, I think you would have to take a longer period of time to get the result, in either case; that is, a month would not be a fair criterion in either case.

MR. MCBRIDE: But you may have a credit to your expense one month which is very little, and the next month after very large; they may jump up and down and have no relation to each other.

MR. RENSEN HOUSE: I think it would be fair to assume that the administrative force would handle it every month.

MR. HOLME: Is the 10 percent mentioned on the labor or on the total cost of construction?

MR. RENSENHOUSE: That is 10 percent on the labor and material.

MR. HOLME: We in the New York Edison Company do not distribute the general office labor at all. That is treated as a general expense, but in the departments themselves there is a good deal of administration, superintendence, etc. and all of that

time is charged to a working order, and that order is credited with a certain percentage prorated or added to all other active jobs. The cost of the overhead job is rather permanent and does not vary much while the amount of our construction work will vary from month to month. In January the amount prorated out over the actual work may have been less than the cost of the standing overhead job, but it will average itself over the year so that at the end we endeavor to exhaust it and have nothing left. I think our percentage will run about 15, but that is on labor only. We use it on labor only, because we have concluded that overhead expense is proportional to the labor rather than to labor and material. We have some jobs involving large material items and very little labor, and the percentage added for overhead would be very small, hence we think it is more logical to prorate it to the labor alone than to the total cost which might also include outside contracts. Most of the cost of a job may be the charges from outside contracts. Every material delivery has a percentage added for storehouse expense. That, of course, is a credit to a suspense account which has been charged with all those expenses. That percentage also may vary. It might be 7 percent or even higher.

REPORT OF COMMITTEE ON NOMINATIONS

The Committee on Nominations begs to submit the following names in nomination for the respective offices of the Section: For Chairman J L Bailey (Baltimore)

Vice-Chairman Paul R Jones (New York City)
Treasurer C E Calder (Dallas)

Secretary Frederick Schmitt (New York City)
Directors JH Gulick (Chicago)

RW Symes (Detroit)

RH Ballard (Los Angeles)
FL Hall (Providence)
H Spoehrer (St Louis)
WC Long (Philadelphia)

E J Allegaert (Newark)

Respectfully submitted,

T. F. WICKHAM, Chairman

C. E. FOSTER

E. J. FOWLER

F. L. HALL

J. C. VAN DUYNE

MR. J. C. VAN DUYNE, Brooklyn: I move the adoption of the report of the Nominating Committee.

MR. E. J. FOWLER, Chicago: I second the motion.

(Motion was carried unanimously)

MR. FRANK MURTHA, Philadelphia: I move that the Secretary be instructed to cast one ballot for the ticket as presented by the Nominating Committee. (The motion was carried unanimously and the ballot so cast)

CHAIRMAN EDWARDS: I have enjoyed our sessions hugely, this year, and the pleasure of presiding has been great. The response on the part of the membership has been quick and the debating good. In my opinion great results are promised from our meetings. I leave the active management of the Section in very capable hands, and I see a great future of usefulness for you. I shall always be at the disposal of the Section, although