<div class="htmlview paragraph">In order to flourish, business must operate at a profit. As the margin of profit is daily becoming smaller, costs must be analyzed so that economies can be effected. As a lack of uniformity exists in the methods of arriving at the cost of operation, a brief outline is given of the items that enter into the totals from which operating costs are calculated and also of what constitutes the economic life of a motor vehicle.</div> <div class="htmlview paragraph">Selection of the correct type and size of vehicle is of paramount importance; and standardization of the various makes will result in better operation, more efficient inspection, and more economical repair and upkeep. Having then determined the cost of operation of a vehicle, a decision must be made as to the basis on which its economic life can be computed.</div> <div class="htmlview paragraph">The items said to contribute to operating cost are drivers' wages; gasoline and lubrication expense; repairs; tires; sundries, including taxes; license fees and insurance; depreciation; and miscellaneous charges, such as garage rent and the various items of overhead expense. Each of these factors is discussed in detail.</div> <div class="htmlview paragraph">The economic life of the vehicle is dependent on the type and size of the unit, and the three principal causes of replacement: (<i>a</i>) physical depreciation, (<i>b</i>) unsuitability for the services for which it was purchased and (<i>c</i>) obsolescence. These factors are also given detailed consideration.</div> <div class="htmlview paragraph">Charts show graphically the results derived from the operation of a cheap type of automobile over a 5-year period; the logical time for trading-in an old car for a new one; the cost of operation of 2-ton trucks over a period of 7 years; the annual replacement-cost and the average annual maintenance-ccst over the same period; and the average prices of the automobile and the cost of gasoline, oil and tires for the same period, to furnish a basis of comparison between the price of the commodity and the cost of operation.</div> <div class="htmlview paragraph">The conclusion reached is that, although any truck built by a reputable company will have an economic life of at least 8 or 10 years, it is essential in each case to take into consideration the conditions under which the truck operates; consequently, a rule that will govern all cases is difficult to derive.</div>