1. Find the annual depreciation on a building worth $15,560, if 4% is charged off each year.

2. How much is charged off annually for depreciation by a manufacturer who owns property which depreciates at the following rates?

3. The owner of a building estimates the annual depreciation as 3% of its cost. The building cost $4,000. What is the amount of the annual depreciation?

The building is rented at $40 per month. If the taxes, insurance, and other expenses amount to $80 per year, what net income does the owner of this property receive on his investment after allowing for depreciation?

4. It is estimated that a machine costing $2,220 can be sold at the end of eight years for $500. What per cent should be charged annually for depreciation by the straight line method, and what will be the amount of the annual depreciation?

5. A machine cost $5,000.00; it has an estimated life of five years and an estimated residual value of $100.00. Prepare a table showing

the annual depreciation charges and carrying values by the straight line method.

6. Prepare a table using the same facts as in problem 5 but writing off depreciation on the diminishing value, using 54.27% as the rate.

7. Prepare a table using the same facts as in problem 5 but writing off depreciation by the sum of the years' digits method.

CHAPTER XXXIII

ADVERTISING

DURING the last fifty years the annual cost of advertising in this country has increased to more than seven hundred million dollars. The advertising methods employed are numerous. The principal mediums are newspapers, magazines, street car signs, posters, electric signs, circulars, booklets, and novelties.

279. Newspapers. Newspaper space is sold by the page, inch, and agate line. The word "agate" refers to the size of the type.

This is a line of agate type.

An inch contains nine lines, of agate type when a lead is placed between each line; or 12 lines when set solid. The price varies with the circulation of the newspaper; 3 cents per inch per thousand subscribers is considered a fair basis on which a newspaper may determine its rates. On this basis, a newspaper with a circulation of 5,000 would charge 15 cents per inch for its space. The larger newspapers generally compute their rates on the basis of 7 cents per line per thousand subscribers, but there are many exceptions to this.

280. Magazines. The rate charged by magazines for advertising space also depends upon the circulation, a fair basis being considered cent per line, or $1.00 per page, per thousand subscribers. Higher rates are charged for the more desirable positions, such as cover page, and for printing in colors.

Forms close on the 10th day of the month preceding date of issue.

One well-known magazine with a very large circulation charges $4,000 per page, and there are several magazines which charge more than $250 per page.

281. Street Car Signs. Space is provided above the windows of most street cars for printed signs. These signs differ in size, but the standard size is 11 in. x 21 in. Some cards of double length are used; these are 11 in. x 42 in. The ordinary rate for street car advertising space is 50 cents per month per car for a half run, which means six months in all the cars, or one year in one half the cars. It is 45 cents a car per month when all cars are used for a full year. Exceptions to this rate apply in New York, Chicago, and some other large cities. The cards are furnished at the expense of the advertiser.

282. Posters. Posters are printed in various sizes, but the standard unit is a sheet 28 in. x 42 in. The billboards are usually about 10 feet high, in order to accommodate 4-sheet posters. The charge made for rent of boards and posting signs depends upon the size of the city and the desirability of the location. The rates range from 4 cents to 30 cents a sheet per month. A discount of 5% is usually given on a contract for three months' service, and 10% on a contract for six months' service. The cost of printing the posters ranges from 1 cents to 4 cents per sheet depending on the quality and quantity.

283. The Advertising Agency. In many of the larger cities there are advertising agencies which assist advertisers in preparing copy, in directing advertising campaigns, and in selecting the best medium for advertising a particular article. On the theory that the agency creates new business, publishers usually allow agencies a commission of from 10% to 15% of the gross cost of all advertising placed with them for publication.

284. Checking Results. Large advertisers make special efforts to determine the mediums which bring the greatest number of inquiries, and which result in the most sales and the largest amount of profit. For this purpose, the advertisements in the various newspapers and magazines are "keyed"; for example, the address may be differently stated in each medium, or different booklets may be offered, so that when the replies are received in the office, it will be possible to determine the medium which attracted the reader. Each periodical is credited with the replies received from its readers. Further records are kept to determine the value of the goods sold to the readers of the periodical, and the profit resulting therefrom.

Written Work

Refer to the newspaper rate card on page 329 to obtain facts for Problems 1, 2, and 3.

1. On the basis of nine agate lines to the inch, what is the cost of a four-inch, single-column advertisement? The advertisement appears next to reading matter.

2. What is the cost of a double-column, 40-line display advertisement, printed by request on the financial page? How much would the same advertisement cost if printed on a specified page of the Sunday paper? Can you account for the increased cost?

3. A clothing store contracted for 10,000 lines to be printed in the course of a year. 8,000 lines were printed in the daily editions, "run of paper." 1,200 lines were printed in the daily editions on specified pages, and the balance appeared in the Sunday editions next to the reading matter. What was the total cost?

4. A breakfast food manufacturer ran the following amount of advertising in the magazine whose rate card is printed on page 330.