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The first, or double-step, type might also be called the `` railroad type '' because of its application to railroads ( and other transportation agencies ) by the Cost Section of the Interstate Commerce Commission.

The Cost Section distinguishes between ( directly ) variable costs and constant costs in a manner noted in the preceding chapter.

The variable costs alone are assigned to the different units of freight traffic as representing `` long-run out-of-pocket costs '' -- a term with a meaning here not distinctly different from that of the economist's `` long-run marginal costs ''.

There remains a residue of total costs, or total `` revenue requirements '' which, since it is found to behave as if it were constant over substantial variations in traffic density, is strictly unallocable on a cost-finding basis.

Nevertheless, because the Cost Section has felt impelled to make some kind of a distribution of total costs, it has apportioned this residue, which it sometimes calls `` burden '', among the units of carload traffic on a basis ( partly ton, partly ton-mile ) which is concededly quite arbitrary from the standpoint of cost determination.

In recent years, this burden ( which includes allowances for revenue deficiencies in the passenger business and in less-than-carload freight traffic!!

) has amounted to about one third of those total revenue requirements which the carload freight business is supposed to be called upon to meet.