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But in the second subtype, which I take to be the one more frequently applied, only the operating expenses and not the `` cost of capital '' or `` fair return '' are apportioned directly among the various classes of service.

To be sure, the capital investments in ( or, alternatively, the estimated `` fair values '' of ) the plant and equipment are apportioned among the different classes, as are also the gross revenues received from the sales of the different services.

But any resulting excess of revenues received from a given class of service over the operating costs imputed to this class is reported as a `` return '' realized on the capital investment attributed to the same service.

Thus, during any given year ( A ) if the revenues from the residential service are $7,000,000, ( B ) if the operating expenses imputed to this class of service come to $5,000,000, and ( C ) if the net investment in ( or value of ) the plant and equipment deemed devoted to this service amounts to $30,000,000, the cost analyst will report that residential service, in the aggregate, has yielded a return of $2,000,000 or 6-2/3 per cent.

Other services will show different rates of return, some probably much lower and some higher.