A. Overview. The
cost of milk to a dealer consists of a dealer's raw product costs as calculated
according to subsection 8 or C, plus the dealer's expenses directly and
indirectly incurred in receiving, processing, packaging and delivering the
regulated product as calculated according to subsection D, E, or F. Examples of
dealer expenses directly and indirectly incurred in receiving, processing,
packaging and delivering milk are set forth in Section I(B).
This section contains three sets of procedures for
determining raw product costs. The first of these applies to Maine dealers who
buy milk in bulk from Maine producers and themselves process the milk they
sell. The second of these is similar to the first except that it applies to
sales which are not subject to regulation by the State of Maine. The third
procedure, which might more appropriately be called packaged product costs,
applies to the purchase of milk by subdealers from dealers. See the definitions
of "subdealer" and "dealer" contained in Sections I(N) and (D),
respectively.
The expenses directly and indirectly incurred by a dealer in
receiving, processing, packaging and delivering the regulated product may be
determined by the Commission on the basis of the dealer's actual expenses as
calculated under D OR E, or, unless the dealer proves lower actual costs, on
the basis of its imputed expenses as calculated under F.
B. Raw Product Costs for all Dealers Other
Than Subdealers.
1. Raw product costs for milk
purchased by Maine dairies from Maine producers shall be determined as set
forth in subparagraphs (a) - (c), except that where the dealer's purchase price
for raw milk is not required by State or Federal law to be based upon a Class I
price established by a governmental agency, the dealer's raw product costs
shall be deemed to be the purchase price as adjusted by the prevailing
butterfat differential, plus any hauling charges paid by the dealer.
(a) Determine the Class I price per
hundredweight of raw milk of 3.5% butterfat content as established monthly by
the Commission:
(b) Reduce the
Class I price per hundredweight by the butterfat differential established by
the Federal Market Administrator for Federal Milk Order No. I (New England Milk
Marketing Area) so as to reflect the dollar value on a hundredweight basis of
the butterfat found in various formulations of fluid milk. Whole milk shall be
deemed to have a butterfat content of 3.25% butterfat unless shown otherwise by
the dealer. Nonfat (fat-free) milk shall be deemed to have a butterfat content
of .1% butterfat unless shown otherwise by the dealer. Lowfat milk, and skim
milk other than nonfat (fat-free) milk shall be deemed to have the butterfat
content designated on the cap or container, or as otherwise determined by the
Commission.
(c) Divide the Class I
price of the milk as reduced to reflect the dollar value of its packaged
butterfat content on a hundredweight basis by the appropriate generally
accepted conversion factor so as to determine the raw product dollar value of
packaged milk of varying butterfat content as sold in gallons, three-quart,
half-gallon, quart and bulk containers.
2. Raw product costs for milk not purchased
by Maine dealers from Maine producers (i.e., transactions not subject to the
Class I price established monthly by the Commission) shall be based upon the
actual price paid by the dealer for Class I milk of 3.5% butterfat content as
reduced by the established or prevailing butterfat differential, so that the
butterfat value of fluid milk of varying formulations sold in various container
sizes may be calculated in the same manner as set forth in paragraph 1, except
that any hauling charges paid by the dealer shall also be included in the
calculation of raw product costs. Where the dealer's purchase price for raw
milk is not required by state or federal law to be based upon a Class I price
established by a governmental agency, the dealer's raw product costs shall be
deemed to be the purchase price as adjusted by the prevailing butterfat
differential, plus any hauling charges paid by the dealer.
C. Raw Product Costs for Subdealers.
The raw product cost for subdealers shall be the purchase
price paid by the subdealer to the dealer for the regulated product.
D. Actual Expenses of Receiving,
Processing, Packaging and Delivering Milk Incurred by Dealers Subject to
Commission Rule 5A.
The Commission may determine the dealer's expenses directly
and indirectly incurred in receiving, processing, packaging and delivering milk
on the basis of the McClain System reports and information filed by the dealer
with the Commission. In addition to submitting McClain System Cost Accounting
information, a dealer may also submit a determination of its expenses by a cost
accounting system other than the McClain System and request that the Commission
use such other system to determine its expenses. A dealer submitting a
determination of expenses by a cost accounting system other than McClain must
demonstrate, and the Commission must find, that the cost accounting system is
regularly used by the dealer in the conduct of its business, that it is based
on generally accepted cost accounting principles and that it is at least
equivalent to the McClain System in comprehensiveness and reliability as to the
expenses incurred in the receiving, processing, packaging and delivering of
milk. Where these findings are made, the Commission in its discretion may rely
on either the McClain System or the system submitted by the dealer as providing
the appropriate demonstration of the dealer's actual expenses. Where these
findings are not made, the Commission will rely on the McClain System.
If a dealer contends that its cost of delivering milk to the
store in question is lower than its average delivery costs as derived from the
McClain System, the Commission may recognize In lieu of such average delivery
costs the dealer's cost of delivering milk on the route on which the store is
located or the dealer's average cost of delivering milk to the specific store.
The Commission shall determine the cost of delivering milk on the route on
which the store is located on the basis of the route delivery information filed
by the dealer with the Commission pursuant to Commission Rule 11, and the
appropriate cost inputs (e.g., driver wages, vehicle expenses) contained in the
dealer's records. The Commission shall determine store specific delivery costs
on the basis of the route delivery information filed by the dealer with the
Commission pursuant to Commission Rule 11 and from other cost information
contained in the dealer's records. Store specific costs are to be computed as
the sun of the per case average of common route costs, i.e., those costs which
cannot be unambiguously attributable to any one stop, and the per case average
cost directly attributable to the specific store.
E. Actual Expenses of Receiving, Processing,
Packaging and Delivering Milk Incurred by Dealers Not Subject to Commission
Rule 5A. The Commission may determine the dealer's (or subdealer's) expenses
directly or indirectly Incurred in receiving, processing, packaging and
delivering milk on the basis of the McClain System. At the request of the
Commission the dealer or subdealer shall prepare and file, within the time set
by the Commission, the information and reports required by Rules 5A and 11
covering such periods of time as the Commission may designate.
Alternatively, a dealer or subdealer may submit a
determination of its expenses by a cost accounting system other than the
McClain system and request that the Commission use such other system to
determine the dealer's or subdealer's expenses. A dealer or subdealer
submitting a determination of expenses by a cost accounting system other than
McClain must demonstrate, and the Commission must find, that the cost
accounting system is regularly used by the dealer or subdealer in the conduct
of its business, that it is based on generally accepted cost accounting
principles and that it is at least equivalent to the McClain system in
comprehensiveness and reliability as to expenses incurred in the receiving,
processing, packaging and delivering of milk. Where these findings are not
made, the dealer or subdealer shall prepare and file, within the time set by
the Commission, information and reports required by rules 5A and 11 covering
such periods of time as the Commission may designate. Where these findings are
made, the Commission will rely on the system submitted by the dealer or
subdealer as providing the appropriate demonstration of the dealer's or
subdealer's actual expenses.
The Commission may recognize route delivery costs or store
specific delivery costs in lieu of average delivery costs in the same
circumstances and manner as set forth in subsection D.
F. Imputed Expenses of Receiving, Processing,
Packaging and Delivering Milk (All Dealers and Subdealers).
1. In the case of dealers other than
subdealers, the Commission may determine the imputed expenses of receiving,
processing, packaging and delivering milk by multiplying the dealer's price to
the retailer for the regulated product by that percentage shown on Table I
which most closely corresponds to the raw product cost per hundredweight, as
adjusted for butterfat content under Section V(B) (1) (b), that was paid by the
dealer with respect to the regulated product.
2. In the case of subdealers, the Commission
shall determine the imputed expenses of delivering the regulated product by
multiplying the subdealer's price to the retailer for the regulated product by
that percentage shown on Table II which corresponds most closely to the
purchase price paid by the subdealer to the dealer for the regulated
product.
3. Upon request of the
Commission, a dealer or subdealer shall furnish to the Commission, within the
time set by the Commission, all information necessary for it to determine the
raw product cost paid for the regulated product. in the absence of a timely
response the Commission shall calculate imputed expenses for purposes of this
subsection on the basis of the Maine Class I price, subject to adjustment for
butterfat content, which was in effect at the time of the transaction under
examination.
4. Any proof of actual
expenses lower than the imputed expenses of receiving, processing, packaging
and delivering milk as calculated by the Commission under this subsection shall
be made by the dealer.
(a) in the case of a
dealer subject to Rule 5A, in the manner provided in D. for the determination
by the Commission of actual expenses of such dealers:
(b) in the case of a dealer not subject to
Rule 5A, in the manner provided in E. for the determination by the Commission
of actual expenses of such dealers.
