udes more than one four-digit SIC code or an aggregation of products of less an one four-digit SIC code may be used provided the level of aggregation reects the entity's customary pricing unit (e.g., cost or profit center) with respect that level of aggregation chosen. (2) With respect to all other food manufacturing activities (i) a product or i) an aggregation of products categorized by a four-digit Standard Industrial lassification (SIC) code if that is the customary pricing unit (e.g., cost or profit enter) with respect to that aggregation of products. An aggregation of products less than one four-digit SIC code (but not more than one four-digit SIC code) ay be used provided the level of aggregation reflects the customary pricing unit e.g., cost or profit center) with respect to that level of aggregation chosen. "Total sales revenues" means the aggregate revenue from the sale of food. 150.604 Food wholesaling and retailing. (a) General Rule.-Except as provided in paragraph (b) of this section, Subart K of this part applies to the wholesaling and retailing activities of firms abject to this subpart. (b) Subpart K modifications.—(1) A firm engaged in food retailing and which erives 75 percent or more of its annual sales or revenues from retail food sales ay, at its option, use as a pricing base period either one of the last two fiscal ears which ended prior to February 5, 1973, and may apply the pricing base eriod chosen to both its food and nonfood retail activities. (2) "Adjusted freeze price" means adjusted freeze price as defined in § 150.603. 150.605 Food service activities. (a) General rule.-Except as provided in paragraph (b) of this section, Subart E of this part applies to the food service activities of firms subject to this ubpart. (b) Subpart E modifications.—“Adjusted freeze price" means adjusted freeze rice as defined in § 150.603 of this subpart. (c) Prenotification.—Section 150.151 does not apply with respect to the food ervice activities of firms subject to this subpart. 150.606 Food manufacturing: Gross margin for food raw materials. (a) Purpose and scope.-The purpose of this section is to apply to food manuacturing activities, on a product line basis, a gross margin rule of the type previously applicable only to firms engaged in the slaughtering and processing f livestock or the manufacturing of meat items. Except as provided in pararaph (b) of this section, the gross margin rule is applicable with respect to all ood manufacturing activities. Under the gross margin rule, increases and dereases in food raw material costs (costs which generally fluctuate significantly) an be passed through on a dollar-for-dollar basis without prenotification and vithout "volatile" pricing authorization. Price increases to recover net allowable mcreases in costs other than food raw material costs are subject to Subpart E f this part as modified by § 150.607. (b) Applicability. This section applies to the food manufacturing activities of all firms, except that a firm which both derives less than 20 percent of its nnual sales or revenues from food manufacturing and less than $50 million of nnual sales or revenue from food manufacturing may elect to price with respect o its food manufacturing activities in accordance with this section or in accord nce with Subpart E of this part. A firm engaged in food manufacturing which also produces non-food by-products of food raw materials, such as leather, tallow. nd industrial oils, shall treat those by-products as food items for purposes of his section. (c) Gross margin rules.—(1) Except as provided in paragraph (c) (2) of this section, any price may be charged with respect to any item as long as total sales revenues for a product line for any accounting month ending after September 11, 1973, do not exceed the amount derived by (i) multiplying the base period conversion cost rate for that product line by the volume of food raw material units for that product line in the accounting month concerned, (ii) multiplying the product in (i) by the conversion cost increase for that product line plus 100percent and (iii) adding to the product in (ii) the food raw material costs for that product line in the accounting month concerned plus the base period gross margin rate for that product line times the volume of food raw material units for that product line in the accounting month concerned. This computation is illustrated by the following equation : Where R=(BxV) (C+100%)+M+(PxV) R=total sales revenues for the accounting month concerned B=base period converison cost rate V=volume of food raw material units during the accounting month concerned M=food raw material costs during the accounting month concerned (2) (i) Sales revenues for any accounting month may exceed the total s revenues calculated in accordance with paragraph (c)(1) of this section onl the firm concerned demonstrates, to the satisfaction of the Council, that t excess is justified on the basis of seasonal patterns or is attributable to revesti derived from the sale of exempt items or from allowable prices pursuant >$ 150.76. (ii) Total sales revenues in any product line in the accounting month whi includes September 11, 1973, may exceed the amount specified in paragraph t (1) of this section. However, total sales revenues in any product line in the succeeding accounting month may not exceed the amount specified in paragra (c) (1) of this section less the amount of revenue excess experienced in accounting month which includes September 11, 1973, which is not justifiable the basis of seasonal patterns or attributable to revenues derived from the sa of exempt items or from allowable prices pursuant to § 150.76. (3)(i) Notwithstanding paragraph (c)(1) and (2) of this section, a firm su jeet to this section which charges a price for any item in excess of the adjus freeze price for that item may not, for the fiscal year in which that price excess of the adjusted freeze price is charged, exceed its base period profit manas defined in § 150.31. (ii) The Council shall excuse a profit margin excess for any fiscal year to t extent that the firm concerned demonstrates, to the satisfaction of the Count that the excess is attributable to the sale of exempt items or to the charging allowable prices pursuant to § 150.76. (4) (i) Food raw material purchased and resold without change in form ma be excluded in computing the base period conversion cost rate. Food raw materia purchased and resold without change in form shall be excluded in comput food raw material units and food raw material costs for any accounting mon ending after September 11, 1973. (ii) The cost of freight and insurance in connection with the purchase of f raw material ("freight-in") may either be included in or excluded from fo raw material costs during the base period but the treatment of "freight shall be consistent as between the base period and each accounting month ing after September 11, 1973. The cost of freight and insurance in conne with food sales ("freight-out") may either be included in or excluded fr food sales revenues during the base period but the treatment of "freight shall be consistent as between the base period and each accounting month endit after September 11, 1973. M (iii) A firm which uses the futures markets in a non-speculative manner hedge against price risks may include as a food raw material cost during the la period any net loss as a result of non-speculative hedging activities with spect to the food raw material concerned during the base period, and may indie as an offset to food raw material costs any net gain as a result of non-speculativ hedging activities with respect to the food raw material concerned during base period. Similarly, any net hedging losses by that firm with respect ! food markets during the base period may be included as an offset to total sal revenues during the base period and any net hedging gains by that firm w respect to food markets during the base period may be included in total sais revennes during the base period. However, a firm which includes any net pursuant to the preceding two sentences shall include as an offset any net c as a result of non-speculative hedging activities in accordance with the pres ing two sentences. Any net hedging losses with respect to the food raw materi concerned during the accounting month concerned may be included as a f raw material cost for the fiscal quarter concerned and any net hedging with respect to the food raw material concerned during the accounting mo quarter concerned. Any net hedging losses with respect to the food market c material cost for the accounting month concerned and any net hedging gains w cerned during the accounting month concerned may be included as a ford r respect to the food market concerned during the accounting month concer ill be included as a offset to food raw material costs for the accounting month cerned. (5) For purposes of the gross margin rule, the base period with respect to a w product line shall be the accounting month following the month in which the st sale occurs. The gross margin rules of this section apply with respect to that w product line beginning with the first day after the base period. However, a firm acquires another firm, the base period conversion cost rate established by › acquired firm with respect to each of its product lines shall remain the base riod conversion cost rate of each of these product lines and the gross margin les of paragraph (c) of this section apply with respect to each of those product es immediately upon acquisition. (d) Options and business practices.—(1) The exercise of the options with rerd to the use of the gross margin rule, the determination of the base period, the clusion of certain food raw materials in the computation of the base period nversion cost rate, and the method of calculating food raw material units shall made as follows: (i) In the case of a price category I or II firm, the option selected in each se shall be set forth in the initial report submitted to the Council pursuant to ragraph (e) of this section; and (ii) In the case of a price category III firm, the option selected in each case all be recorded in a document placed among the firm's records. No change in the exercise of any of these options may be made without the prior ritten approval of the Council or the Internal Revenue Service. (2) Any calculations made pursuant to this section must be reconciled with y change in customary business practices adopted and implemented by the firm. (e) Reporting and recordkeeping. (1) Initial report.-Each price category I ad II firm to which this section applies shall submit to the Cost of Living Coun| within 15 days of the effective date of this section an initial report which prodes the following information: (i) A description of the product lines of the firm and related four-digit SIC des; (ii) Information which demonstrates how the gross margin was calculated for ch product line; (iii) A statement as to whether an input or output basis was used in calculatg food raw material costs; (iv) The nature of the food raw materials included in the computation of ach base period conversion cost rate; (v) The four consecutive fiscal quarters selected for the base period; (vi) A statement as to whether certain food raw materials were excluded com the computation of each base period conversion cost rate pursuant to aragraph (c) (4) (i) of this section. (2) Monthly report.-Each price category I and II firm to which this section pplies shall submit monthly reports with information on costs, sales and profits à accordance with forms and instructions issued by the Council. A monthly report hall be submitted within 30 days after the close of each accounting month. (3) Recordkeeping.-Each price category III firm to which this section applies all prepare and maintain at its principal place of business sufficient records to etermine compliance with this section. 150.607 Food manufacturing: Other pricing rules. (a) General rule.-Except as provided in paragraphs (b) and (c) of this secon and in § 150.606, Subpart E of this part applies to the manufacturing activies of firms subject to this section. (b) Subpart E modifications for firms using gross margin rules.—(1) Food raw aterials may not be used as allowable costs for purposes of price adjustments ursuant to Subpart E of this part. (2) The base cost period is the next succeeding fiscal quarter following the ase period as defined in § 150.603 in which costs other than food raw materials sts were incurred with respect to the product line concerned. The base cost eriod with respect to a new product is the fiscal quarter for which the new prodet concerned with first sold in arms-length trading between unrelated persons. (3) Calculation of costs other than food raw material costs shall be made on he same basis (input or output used in calculating food raw material units purant to $ 150.603. (4) "Product" is a product line as defined in § 150.603. (5) The price of an item which qualifies as a "new product" pursuant to 150.103, or as "custom product" pursuant to § 150.104, shall be determined in ccordance with the rules for determining base price provided in those sections, subject to the limitation that the total sales revenues for the product line with which the new product or custom product falls may not, for any accoun month, exceed the amount prescribed under the gross margin rules in § 150.66 (6) "Adjusted freeze price" means adjusted freeze price as defined in § 1506 | (c) Subpart E modifications for other firms.-Subpart E of this title app with respect to the food manufacturing activities of firms which elect purs to $150.606(b) to price in accordance with that subpart, except that " justed freeze price" means adjusted freeze price as defined in § 150.603. $150.608 Regulated milk and milk products. (a) Definitions.-For purposes of this section: "Regulated milk and milk products" means milk and milk products with spect to which the minimum price is established or the minimum and maxin prices are established by a regulatory agency. "Regulatory agency" means any commission, board, or other legal body est lished in any State or the District of Columbia, which has jurisdiction to ort increases, or reductions, or both, in the prices charged for fluid milk and mi products. "Milk and milk products" includes fluid milk (other than raw milk), lo milk, nonfat (skim) milk, buttermilk, cream, half-and-half, chocolate milk, cottage cheese. "Regulated seller of milk and milk products" means any seller of milk in milk products whose minimum selling prices are fixed by a regulatory agent includes a firm engaged in processing, distributing, wholesaling, or retali (b) General rule.-Notwithstanding any other provision of this part, but s ject to paragraph (c) of this section, a regulated seller of milk and milk pr ucts may charge any price with respect to any item if that price has bee proved as a minimum price by a regulatory agency. A regulated seller of milk and milk products which is a prenotification firm, whose minimum priè for such products to its customers are established by that regulatory agency, sell milk and milk products at the minimums so established without prenotify (c) Report by regulatory agency.-A regulatory agency which establishes imum prices for sellers of milk and milk products must furnish to the C at least 15 days before the proposed increases are to be effective (1) A statement of the types of price increases subject to its jurisdiction 2 generally describing the method used for establishing prices; (2) A certification as to each price increase it approves (in the order granti the increase or in a separate document) of the following: (i) The former price, the date it was estimated, the new price, the percent increase, and the proposed effective date of the new price; (ii) That the increase is the minimum required to assure a continued, adequ” supply of pure and wholesome milk and milk products; and (iii) That, excluding price increases paid for raw milk (which is exempt fr this title) and partially processed products made therefrom, the increases tablished by the regulatory agency will not result in total sales revenues wh exceed the amount permitted under § 150.606 (c). (d) Industry averages.-If a price increase by the regulatory agency is pr ised on cost or other data compiled on the basis of industry averages or sa of the industry which it regulates, compliance with $ 150.606 (c) may be ha on that industry data. However, the Council reserves the right to require the regulatory agency to submit, or to require any regulated seller of milk and products to provide, any addititonal information that the Council consid relevant, including requesting the regulatory agency to obtain from the indus or the same sample on which its increases were predicated, the follo» information: (1) For processors the base period profit margin and the profit margin a period reflecting the new prices: or (2) For wholesalers or retailers the customary initial percentage mont applied during the pricing base period; the percentage markup reflected the allowed price increases; the gross margin realized during the pricing period; the gross margin realized by the allowed price increases: the margin in the base period, and the profit margin in the period reflecting the prices. (e) Effective date of price increases.—At any time within 10 days after re ing a report under paragraph (c) of this section the Council may take any a provided in paragraph (f) of this section, or it may take no action in case the price increases permitted by this section may become effective on the specified in the regulatory agency order. (f) Council actions. With respect to any price increase permitted by this ction, the Council may (1) Require the regulatory agency to furnish additional information concerng the increase; (2) Delay the effective date of the increase pending further Council action, but t for longer than 15 days after receiving the additional information requested der paragraph (f) (1) of this section; (3) Suspend all or part of the increase pending further action by the Council the regulatory agency; or (4) Approve, reject, limit, rescind, reduce, or modify the increase. '50.609 Marketing cooperatives and market risk-sharing transactions. (a) A marketing cooperative as defined in § 150.204(b) is subject to the operans of the gross margin rule in § 150.605 with respect to its food manufacturing tivities. For purposes of computing food raw material costs, marketing cooperaes shall use the imputed allowable costs determined in accordance with § 150.4(d). (b) Firms which are engaged in market risk-sharing transactions as defined in 150.204(b), and which are not otherwise marketing cooperatives as defined in 50.204(b) shall treat such transactions as a separate product line. For purses of computing raw material costs, such firms shall use the imputed allowable sts determined in accordance with § 150.204(d). [FR Doc. 73-18045 Filed 8-22-73; 11:45 am] COST OF LIVING COUNCIL FOOD INDUSTRY WAGE AND SALARY COMMITTEE NOTICE OF CLOSED MEETING Pursuant to the provisions of the Federal Advisory Committee Act (Public aw 92-463, 86 Stat. 770) notice is hereby given that the Food Industry Wage ad Salary Committee, established under the authority of section 212(f) of the conomic Stabilization Act, as amended. section 4(a) (iv) of Executive Order 695, and Cost of Living Council Order No. 14, will meet at 10:00 a.m., Wednesy, August 29, 1973, at 2025 M Street NW., Washington, D.C. The agenda will consist of discussions leading to recommendations on specific hase II and Phase III wage cases in the food area, and future wage policy. Since the above stated meeting will consist of discussions of future food wage licy and Phase II and III cases for decision, pursuant to authority granted me - Cost of Living Council Order 25, I have determined that the meeting would all within exemption (5) of 5 U.S.C. 552(b) and that it is essential to close the eeting to protect the free exchange of internal views and to avoid interference ith the operation of the Committee. Issued in Washington, D.C. on August 22, 1973. HENRY H. PERRITT, Jr., [FR Doc. 73-18121 Filed 8-22-73; 4:46 pm] [From the Federal Register, Aug. 31, 1973] COST OF LIVING COUNCIL EXECUTIVE AND VARIABLE COMPENSATION NOTICE OF PROPOSED RULEMAKING Notice is hereby given that the regulations set forth in tentative form below re proposed to be prescribed by the Cost of Living Council. Since the rules set orth in Part 152 are essential to the expeditious implementation of the Economic Stabilization Act of 1970, as amended, the Council finds that the time for submision of comments or suggestions by interested persons in accordance with usual ulemaking procedures is impracticable and that good cause exists for making hese regulations effective in less than 30 days. Prior to final adoption of the |