Gr. —10e

Summary of Accounts. The attached summary of accounts sets out the allocation of the expenditure and receipts to 31st March, 1933. Item 1. Units Account. —The supporting statement sets out the allocation of the expenditure under various headings as far as available information permits. Included in the unit accounts are accounts covering expenditure on sections which are not at present active units but which are liable for a proportion of costs of expenditure, chiefly boundary fencing. Item 4. Water-supply.—lt is anticipated that the respective schemes will be completed and the total cost of the water-supply will be apportioned to the sections benefited during the current year. Items 5 and 6. Horses and Equipment.—Some difficulty has been experienced in the past in ascertaining the extent to which units have used the horses and equipment. This is particularly the case in respect of operations conducted in Mr. Guthrie's time. Charges to the extent of £50 os. 3d. have been brought into account, and the instructions issued to the foreman are calculated to overcome this difficulty in the future. Item 8. Implements.—The position in regard to this item is somewhat similar to items 5 and 6, bat charges to the extent of £63 lis. 9d. have been brought into account. Item 10. Roading. —No action has yet been taken to apportion the cost of roading to units as additions are contemplated. It is proposed, however, that the cost should be recovered by means of a levy based on the unimproved value of the area affected directly and indirectly, the levy to be spread over a period of years. Item 14. Stores Suspense.—This item covers the apparent shortage on stores at cost price. While the majority of the items covered by this amount represent issues not accounted for in Mr. Guthrie's time, it is not considered that the whole amount should be treated as a loss. In fact data obtained for the purpose of this report will assist in bringing to charge many items at present not accounted for. Item 15. Horse-feed. —This item covers chaff used for various development operations but in respect of which the data available does not permit its being specifically charged. In this respect a measure of blame must be attached to the supervision particularly in the early stages. As all units benefited directly or indirectly by the use of the chaff, it is not considered that an injustice is done by including this item for apportionment by means of an "On cost." Adequate measures have been adopted to prevent a recurrence in the future. Item 16. Miscellaneous Expenditure.—These amounts are largely made up of miscellaneous wages which could not be specifically attached to individual units or operations, chiefly in the initial operations. Item 19. Stores Account.—This item represents the equivalent to a gross profit on the stores account occasioned by the policy of adding a percentage on cost price of purchases. Item 20. Sheep Account.—This represents the net profit on the sheep acquired primarily for the eradication of ragwort at Jerusalem. Item 21. "On Cost."—Various methods have been explored in an endeavour to apportion this Item 21 in an equitable manner, and it is considered that a combination of the following is the most equitable method to adopt:— (a) Percentage on stores issued. (b) Percentage on wages paid. (c) Percentage on butterfat returns. The first method has been applied and is reflected in Item 19. The ratio on which the balance of "On cost "isto be met under (b) and (c) would depend on the supervision necessary. While development is proceeding the ratio would be higher in (6) than in (c), for as time goes on supervision of farming will become the principal overhead charge. In the present case a ratio of approximately | and | is considered applicable to the present position. In the attached summary of unit accounts "On cost " has been calculated and added in the manner indicated above. If there is no objection to the principle adopted I will have the relative entries passed through the respective accounts affected, as at the Ist April, 1933. The result has, however, been incorporated in the summary of unit accounts which is attached. While the "On cost " may appear somewhat high, it must be borne in mind that a period of three years is covered by this " On cost," and a large percentage of non-recurring expenditure has been brought to charge. The sum of £189 12s. carried forward, together with overhead charges for the current year, should result in a very small " On cost " this year. I might add that every endeavour and inquiry has been made to bring into account items directly apportionable to units as distinct from " On cost." Item 22. Calf-pens.—This item will ultimately be met by a charge on returns from bobby calves. Item 23. Units Surplus Stock (Agistment and Sundry Expenses Account). —This item will be apportioned to units affected when total costs are ascertained. It covers expenses incidental to grazing surplus stock of units pending replacement of culls or disposal of surplus.

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