Wer. John V. Browning Wareh 3, 1953 Hence, they usually become a part of the the total output. units of the total output which were proall of prices gelline duced during the expense period and are usually recovered from the sale of all such units. In the eage of @ new product, however, Whose cesirn-~ ing and development involved an expense which ean not be recovered by the manufacturer from the sale of its output during the period in whieh such expense was incurred, it 18 customary, TI believe, to charge such expense to eath such new product which the manufacturer expects to make and gell during a period which will permit the recovery of such expense. in other words, tiat kind of expense becomes a part of the seliing prices of future output of the new product and is recovered from future sales thereof, Certainly, it is not chargeable in full to the eost of production of the first iot of the new product which is made by the manufacturer, uniess it is fully recoverable from the sale of the first lot. Nor is it properly chargeable to the first lot in any greater amount than to any later lot, unless the greater amount is recoverable from the sale of the first lot. | Incidentally, if that kind of expense were included in the dutiable value of the 11 sampie guns in question in any greater amount than is properly chargeable to them, your company would pay duty again on that excess amount, as a part of the dutiable value of its future importations of such guns. fhe third element of statutory "cost of production” is the cost of all containers and coverings and all other costs, charges and expenses incident to placing the merchandise in conacition packed ready for shipment to the United States. As applied to the 11 sample cuns in question, this means the cost of labor in packing them for shipment to the United States plus the cost of the containers and coverings in which they packed, were so - The fourth element of statutory “cost of production" is an “addition for profit™ above the sum of its first and second elements. That addition must be not less than 6% of the total of those two elements and must be equal (in pereentage of that total) to the profit which 1s ordinarily added to like elements of the cost of production cof merchandise of the same general character by manufacturers in the country where the nerchandise game term in question is made. The ceneral character", aa thus used, “such or similar merchandise", as term "merchandise of the is much broader than the employed in items 1 and 2