Letter, Subject: Basis for Published Price List of Radioisotopes

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' Subjeott Basis for Published Price List of Radioisotopeso 1. The following i s an explanation of the mechanism used i n estimating and determining selling prices of radioelearents i n oonnection with the non-Pro j ect isotope distribution program. 2. In response t o a rtquest;from General Nichols dated 29 May 1946, to of the operations a t Clinton Laboratories inthe production and distribution of radioisotopes. Mr. Prescott Sandidge, of the Monsanto Chemical Company, on 25 June 1946 submitted tothe District Engineer a detailed analysis, "Cost Esti - mate for Production of Radioactive Isotopes." costs, excluding depreciation and amortization of research and development expense, oomputed according to standard businese procedure within the limits ofaccuraoy,of the basic technical data supplied for this purpose. These estimates present the true ' 3. "he Isotopes Branoh prepared apr ioe list for general pub lim tion based on'Ule cost estimates. Engineer subject to review, expansion and revision within three to six math8 when additional facts should be available from experience and research. tails of the elements analyzed for purposes of this oost estimate are briefly outlined by taking the following example. This price list was approved by the District Cost Estimate f o r I 131 by Te Transmutation, Chemiccsll Separated. Per 4 0 - ~ lli curies d, Indirect and Administrative Expense and Dist rub it ion Total Production Cost i n Bulk beIn addition, for each request a fixed $25 handling fee Explanation of the items illustrated by the example outlined in i s added tothe charge based on item "a" t o Irdl'o

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Subject: Basis for Published Price List of Radioisotopes. 16 July 19460 a. The sample preparation cost includes the direct cost of the irradiation container and the target material plus the labor cost of filling and assembling t h e sample. b. Pile irradiation cost has been computed on the actual monthly operating cost including labor, utilities, and materials and suppfies ($19,000). . The fraction of this cost applicable to radioisotope production i s based on the relative neutron absorption of the irradiated material. o f neutrons absorbed by the irradiated material, based on the absorbed "inhour" reactivity of the pile and the length of' irradiation.) duced f o r each individual isotope. a mrt iz ation costs have not been included i n prices. (An "inhour-mo" isa term used t o measure the total number Costa have been reproThe pile investnent cost and monthly C.Post irradiation chemical separation and processing costs when involved are i n terms of man days and are shown for each isotope e The average salary from actual payrolls for the Chemistry Division i s $20 per working day. Direct add it iom l charges per man'dny, from actual records, amount t o $13.330 The total direct cost per mu day amounts t o $33.33. d. Analysis of Clinton Laboratories' April costs ratlects an indirect oost of $1*83 for each $1 of direct expenseo and wages, mterias and supplies, operetions and maintenanoe. Indirect costs include accountirig, purchasing, guards, personnel and employment, management, stores and maintenacoe overhead, general office services, safety,fire protec tion, cafeteria, laundry, medical, transportation, etc. No ready basis is availfibla for estimating an additional factor rh ich is known i n business as the " sell in s 01- distribution " expense, because of the unique character of iso - valid by Mcnsanto. by Monsanto indicates approximately 2% of' the total other costs (2.83) for this and distribution expense to the total direct cost is thus 188.67$, Direct costs include salaries Inclusion of some expsnse of this nature is considered A projection of annual costs of sales o f other items sold The factor used i n estimating the ratio of indirect,administrative e * The handling charge of $25 per ship ner t odded t o the bulk cost of the isotope i s helieved sufficient to cover the costa for smll shipments. The $25 charge includes two factors : First,direct costs have been estimated for container, handling, a a in tai ning, and other non-office work amounting t o preparation of shipping documents, billing, maintenmce and collection of aoccunts receivable, miscellaneous correspondence and other like office functionso Such indirect costs are not available from Clinton Laboratories's records because of no similar past performwce. Work in other establishments ha6 been analyzed and such cost for Clinton Labocatories i s estimated t o be $15. While provisicn for this indirect cost has been made i n the hulk cost for large quantity shinents by reason of a percentage allocation of overhead costs to direct material and labor costs, it does not provide sufficient dollar volume for small shipments In addition to this direct cost, there ere indic ect items o f

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Subject; Basis for Published Prioe List of Radioisotopes, 16 July 19460 to carry a proportiomte load of other items of indirect expense, such a s f i r e protection, guarde, employment and other generhl administrative expenses ally, hecuase o f the soarcity o f meny radjoisotopes, most of ths shipments will be of small amounts. 6 . Your offios has been furnished a oopy o f the complete cost analysis, Explanation in detail “Cost Estimate f o r Production of Radioactive Isotopes,” June 22, 1946, prepared by the bnsanto Chomioal Company, Clinton Labotmtories, o f the item discussed in Paragraph 5 of t h i s memorandwn are given on page8 82-87 of the above mentioned docum9nte riving ata price forC 14 i s illustrated on pages 63-66, It will be noted that wherever more than one price cbn be figured forE single isotope due t o different irradiation tines i n the pile,R8is the\.oase for C 14, the hishest price has been adopteda How the principles are applied in arColonel, Corpos ‘of Engineers, Deputy District Ibgineer.