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In conversation with your office, the question was raised as to what proportion of labor cost Including Supervision, office employees and other Indirect labor charges would be assigned to the production facilities and to the distribution facilities. 1 plan on making & monthly distribution of all labor charges including Supervision, etc., incurred by the Water Company for both distribution and transmission facilities as outlined above. With respect to the determination of amounts for that portion of the bill against the Railroad Company called for under Section 3# paragraphs B through P of Agreement 80300, I believe this is an account­ing matter and should be determined by your department from records in your office. However, if I can be of any assistance, please call on me. With regard to the preparation of LVL&W Co., monthly bill against the Railroad Company for water furnished in each proceeding month, it will be noted that Agreement Audit No. 80300 Section 2, Page ?, provides that the monthly bill will be based on *the best information then available as to the cost of producing, transporting and delivering water, etc. **, in the proceeding month. As a means of simplifying preparation of monthly bill, which would be uniform for the balance of 1953, would suggest that you prepare this bill on the basis of 1.0$ of the record cost to Railroad Company of operating and maintain­ing the Production Facilities during the period January to July 31, 1953, which will of course, include all of the overhead and indirect costs charged the Water Company for that period. The accumulation of monthly charge® could then b© adjusted at end of year as provided for in Audit 803O0* Mr. Peart * Page #3