ent001424-194

?╟≤> * / Page four On the average 1$ of this material will be lost in the course of fermen- tation, leaving a net of 941*5 pounds of "dough". This reduced to ounces equals 15,064 ounces per "dough". To produce one pound of finished product, we are at present using 1&|: ounces of mixed "dough", resultin in production of 825 loaves per "dough". Accordingly, ingredients will cost .0896 cents per loaf of Angelita Bread. Summarizing the costs based on our experience results in the followings Ingredients cost, Shop labor, Shop expense, Administrative expense, Selling expense, Total cost, The foregoing makes no allowance for stale. Our selling price for the product is twenty-two cents per Iosif; that price has generally prevailed in this market for specialty loaves during the past two yestrs. Shop labor, shop expense, administrative expense and selling ex- penses will doubtless vary in some degree from plant to plsint. Based on the foregoing figures, each hundred pounds of mix will result in a production of 135 to 140 loaves of finished product. Providing for royalties based on the charge of $3.00 per bag substantially reduces the three cents per loaf that we originally had in mind. However, we feel that such an arrangement offers a greater prospect of success generally with the product than endeavoring to involve each plant producing the product in con- siderable accounting activity. The arrangement should reduce the expenses to which the Foundation, Selling Company and ourselves would be subjected in attempting to supervise and administer the accounting and collection and dis- bursement of royalty funds. We hope that you will agree with this view. When you have had an opportunity to consider the foregoing, I would like to talk with you on the telephone at your convenience. I had in mind sending you the Minnesota corporation records, anumber of agreements which I have drafted covering the royalty arrangement above suggested, and transfers of trade mark, transfer of Regan's interest in the original agreement to the Minnesota Company, etc., but this program raises some questions in my mind which I would like to discuss with you. .0896 .0225 .0211 .0125 .0550 .2007 cents per loaf. Very truly yours