Quarry: 22 ₴ a tonne sits in the spoil heap

“For six years I signed estimates with one cost per tonne for the whole quarry. Then I split it by bench: one hundred and ninety-five on the top, two hundred and seventy-five on the bottom. Same rock, same crusher, a different price for every decision” — that is how Vasyl Kushnir, owner of a granite quarry in the Zhytomyr region, began.

The picture is familiar. The plant runs, customers pick their tonnage, the weighbridge closes the plan. Cost per tonne is known to the hryvnia — one figure for the whole operation.

The arithmetic breaks in one place. A quarry sells a tonne of crushed stone and pays for a tonne of rock. Between them stands overburden — waste rock stripped off to reach the granite. And it differs on every bench.

Below we split the quarry into two units — a tonne from a named bench and the fraction it yields. And we reach why 22 ₴ of every tonne lies in the spoil heap.

Both units already exist at the quarry. The surveyor knows the bench. The plant operator knows the fraction yield. Neither one is in the accounts.

Vasyl's path: three benches

Vasyl started with one bench and one jaw crusher. The first contracts were rubble for local roads. The overburden was a thin layer of soil, and the cost really was a single figure.

Then came the capital spending: a crushing and screening plant, a drill rig, an excavator on overburden, a weighbridge at the gate. The quarry went deeper. Three benches appeared, and the habit of counting with one figure stayed.

The three benches came from the rock, not from a plan. The top one was worked out, work moved to the second, then the third opened. Each new bench sat deeper than the last, and more waste lay above it.

“While there was one bench, I held all the overburden in my head. Now I take decisions off the monthly report. It has tonnes, revenue and cost. Which bench that tonne came from is not written there. I was signing work orders blind.”

The limit of average cost

Vasyl's books are tidy. 36 000 t of rock a month, revenue 11 232 000 ₴, profit 636 000 ₴. Return — 5.66%.

There is no error in these figures. There is a limit: they are totals. A total is true and prompts nothing — it does not know where each tonne came from.

While the quarry had one bench, the average equalled the real figure. Three benches came, and the average became merely an average. True for the business, untrue for every face taken alone.

Cost per tonne is not one figure, but as many as there are benches.

What the monthly report showed

The accounting the quarry lived with for years is familiar to any operation grown from a single bench.

• Cost was kept as one figure. The bench appeared nowhere — not in the work order, not in the monthly report.
• Overburden went into one pot. The excavator worked all three benches, and its cubic metres were tied to none of them.
• Tonnes were weighed but not separated. The scales saw crushed stone, not the bench it came from. The monthly sheet closed with one total of tonnes.
• Fractions were counted in tonnes. Only the operator knew how much screenings sat under the canopy. Nobody counted the share sold per fraction.
• The spoil heap was treated as zero. Whatever did not sell went over the edge and left the accounts. No line, no price.
• The plan came from plant capacity. The crusher's rated output became the sales plan, and sales were pulled up afterwards.

Not a word here about rock or machinery. Six points, all of them accounting. That is why neither the surveyor, nor the section head, nor Vasyl himself saw them.

A bench's tonne, not a quarry's

A tonne of rock at a quarry is not one unit, but three. Revenue off it is the same: 312 ₴ whatever the bench. Same rock, same fractions, same prices.

The unit is easy to confuse here. The quarry sells a tonne of crushed stone and carries cost on a tonne of rock. Rock is what to count: it is what pulls overburden, drilling and crushing.

Cost differs even though processing does not — 175 ₴ a tonne. That is drilling and blasting 62 ₴, crushing and screening 95 ₴, loading 18 ₴.

Only overburden differs. The stripping ratio is how many cubic metres of waste must come off to reach one tonne of saleable rock. Stripping and hauling a cubic metre costs 80 ₴.

The same price does not mean the same economics at the face.

A cost outside the owner's decision

The deeper the quarry, the more waste lies over the deposit. On top bench A that is 0.25 m³ a tonne. On middle bench B — 0.60 m³. On bottom bench C — 1.25 m³.

Put it into money. That gives 20 ₴ a tonne on A, 48 ₴ on B and 100 ₴ on C.

This is the only cost that grows without any decision by the owner. Nobody changed the technology or raised a tariff. The work simply dropped one bench lower.

The question “why take from the bottom then” has a plain answer. The top bench holds no commercial reserves any more. Depth is not the owner's choice, it is the state of the deposit.

Depth is not optimised — it is priced in.

“For two years I negotiated the haulage rate with the contractor. We did the sums — haulage weighs almost nothing in the cost of a tonne. The bottom bench is dearer because five times more waste rock lies above it. I had been bargaining over the wrong line.”

Where the margin hides

Now the same thing in a table. Processing is identical in every row, revenue too. One column makes the difference.

Bench	Overburden, m³ a tonne	Overburden, ₴/t	Processing, ₴/t	Cost, ₴/t	Revenue, ₴/t	Margin, ₴/t	Tonnes a month	Contribution, ₴
Bench A	0.25	20	175	195	312	117	16 000	1 872 000
Bench B	0.60	48	175	223	312	89	12 000	1 068 000
Bench C	1.25	100	175	275	312	37	8 000	296 000
Total	—	—	—	—	—	—	36 000	3 236 000

The top bench gives 117 ₴ of margin a tonne. The middle one — 89 ₴. The bottom one — 37 ₴. All three rows are the same rock and the same crusher.

Together the benches give 3 236 000 ₴ of contribution a month. Most of it comes from the top: 16 000 t at 117 ₴ is 1 872 000 ₴.

The bottom bench gives a quarter of the volume and less than a tenth of the contribution. In tonnes it looks like a full bench. In money it does not.

Why 0.25 and 1.25 are cubic metres, not money

Two numbers in the first column read easily as shares or as hryvnias. They are cubic metres. 0.25 means this: to take a tonne of saleable rock on the top bench, a quarter of a cubic metre of overburden must come off.

They turn into money in the next column. There stand 20 ₴ and 100 ₴ — the same overburden, multiplied by the cost of a cubic metre.

The gap between 195 and 275 ₴ is only overburden

Cost per tonne on the top bench is 195 ₴, on the bottom one 275 ₴. The difference is 80 ₴. That is exactly the overburden gap: 100 ₴ against 20 ₴. Processing in both rows is identical — 175 ₴.

This is the answer to why an average figure misleads. It falls between 195 ₴ and 275 ₴ and equals neither. And decisions are taken on a particular face.

Geology makes the cost difference, not technology.

What the quarry actually sells

The second half of the sum is not about depth, but about demand. A quarry sells fractions, not rock. The owner does not decide the mix.

The rock and the crusher settings give one and the same mix. Crushed stone 20–40 is 25% of the yield. Crushed stone 5–20 — 35%. Screenings 0–5 — 30%. Oversize rock — 10%.

Oversize rock is the large stone that never went into the crusher. Screenings are the finest material, stone flour from under the screen. Demand for these two fractions is nothing alike.

Fine crushed stone is taken in full, to the last tonne. Buyers come for it themselves. Screenings and rubble stone have to be offered: the difference is not in quality, but in who opens the talks.

The rock sets the product range, not the sales desk.

Yield against demand

Put yield and demand into one table. Two columns of percentages stand side by side, and this is where decisions are taken.

Fraction	Share of yield	Price, ₴/t	Share sold	Potential, ₴/t of rock	Actual, ₴/t	To the heap, ₴/t
Crushed stone 20–40	25%	440	100%	110.00	110.00	0.00
Crushed stone 5–20	35%	480	100%	168.00	168.00	0.00
Screenings 0–5	30%	120	50%	36.00	18.00	18.00
Oversize rock	10%	200	80%	20.00	16.00	4.00
Total	100%	—	—	334	312	22

The first two fractions ship in full. Screenings go at half, oversize rock at 80%. Together a tonne of rock brings 312 ₴ instead of a possible 334 ₴.

The last two columns are the shortest answer to where the money goes. Into the heap go 18.00 ₴ of screenings and 4.00 ₴ of oversize rock from every tonne of rock.

Two series of percentages that must not be mixed

There are two percentage columns in the table, and they are about different things. The first is the share of each fraction in a tonne of rock. They add up to 100%.

The second is how much of each fraction actually reaches the customer. There the sum means nothing. Screenings are 30% of the yield and 50% of the sale: the numbers sit side by side and carry different senses.

334 ₴ potential and 312 ₴ actual

334 ₴ is what a tonne of rock would give if everything shipped. 312 ₴ is what it gives in fact. The difference is 22 ₴ a tonne.

“I wrote those two figures off as rounding. Twenty-two hryvnias a tonne change no decision. Then I multiplied them by the monthly volume. After that I rewrote the sales plan for the quarter.”

The price of an unsold fraction

A spoil heap looks like stock. A cone of screenings under the canopy and oversize rock on the edge read as goods waiting for their buyer.

In money it is not stock. The overburden over that tonne is already stripped, the rock drilled, blasted, crushed and screened. Processing was paid in full — for the crushed stone and for the screenings nobody took.

A fraction lying there is already paid for. Unsold means its costs have landed on the fractions that shipped.

A warehouse holds goods that wait for a buyer and carry a price in the books. The cone under the canopy carries no price. Without a price it enters neither the sales plan nor a conversation with a manager.

A spoil heap is not stock, but cost already incurred.

22 ₴ of every tonne

Then comes plain multiplication. 22 ₴ a tonne over 36 000 t gives 792 000 ₴ a month.

The quarry's profit for the same month is 636 000 ₴. The spoil heap turns out dearer than the whole month's earnings: 125% of profit.

This is not a share of revenue and not a share of cost. It is one measured against the other: what did not sell, against what was left to the owner.

The comparison is uncomfortable precisely because it is honest. Profit is the remainder after all costs. The heap is product whose costs are already borne.

This money need not be found on the market. It is already extracted and paid for. What is left is to sell it.

“What struck me was not the sum, but the comparison. A month of the quarry's work is contracts, wagons at the station, a repairs budget. And on the edge lies more than the business earned that month. The question turned out to be for sales, not for extraction.”

An unsold fraction is dearer than the monthly profit.

The month in total

To put this sum in its place, set it inside the monthly report. Revenue — 11 232 000 ₴. Contribution after overburden and processing — 3 236 000 ₴.

Against it stand the fixed costs. They do not know which bench a tonne came from.

• Wages — 1 120 000 ₴.
• Depreciation of the plant — 520 000 ₴.
• Repairs and spares — 310 000 ₴.
• Land and royalties — 240 000 ₴.
• Administration — 184 000 ₴.
• Geology and permits — 140 000 ₴.
• Security — 86 000 ₴.

That is 2 600 000 ₴ in all. Profit — 636 000 ₴, or 5.66% of revenue.

These costs barely react to volume. The plant, the drill rig, security and royalties are paid the same whether it is 36 000 t a month or less. So every unsold fraction hits the profit itself.

For a quarry this is a working return. And it is what makes a spoil heap of 792 000 ₴ such an awkward figure.

Where this sum does not belong

The first reaction to 792 000 ₴ is always the same: put it into costs. That must not be done. On paper the quarry would turn loss-making, which it is not.

Nobody paid this money to anyone. It is not in the bank statement, because there was no invoice and no shipment. It sits in revenue that never arose.

Revenue is counted on fact — on the tonnes that crossed the scales. Taking the unsold off the profit as well means counting it a second time.

The cost of unsold fractions is already inside. Overburden, drilling, crushing — all of it already sits in the 3 236 000 ₴ of contribution. Part of that cost simply did not become product.

What is the figure for, then? It measures not a cost, but the price of a pattern. It is useful as long as nobody tries to post it as a line in the report.

The right place for this sum is not the profit report, but the monthly sales meeting. There it works as a target, not as a hole.

80% and 80% — labelling each one

80% appears twice in this article, and it is about different things. The first is how much oversize rock sells now. That is a fact. The second comes below: screenings sales can be lifted to 80%. That is a target. There is no arithmetic link between them.

Three decisions and their price

Vasyl took the decision against three scenarios. He costed each one and put them into a single calculation.

Move	What changes	₴ a month
Sell screenings 0–5 at 80% instead of 50%	road base, cement-sand mixes, concrete plants	+388 800
Oversize rock at 100% instead of 80%	rubble stone, bank reinforcement	+144 000
Move 8 000 t from bench C to bench A	margin 37 → 117 ₴/t	+640 000

The first move is about demand, not about rock. Screenings are taken for road base, for cement-sand mixes, for concrete plants. Lifting the share sold to 80% gives 388 800 ₴ a month.

The second is oversize rock. Rubble stone for bank reinforcement and for foundations is taken readily. Pushing the sale to 100% gives another 144 000 ₴.

Neither move is about production. The rock is already lifted, crushed and lying on the edge. What is needed is a customer, not new machinery.

The first two moves give 1.84 times more

Together they lift profit from 636 000 ₴ to 1 168 800 ₴. That is 1.84 times, and without a single new tonne of rock.

No new machinery and no new bench are needed for it. The rock is the same, the crusher the same, the overburden the same. The only change is who gets the screenings.

+640 000 ₴ runs into geology

The third row in the table is the largest. Move 8 000 t from the bottom bench to the top one — and the margin per tonne goes from 37 ₴ to 117 ₴.

At this quarry it does not exist. The top bench is already worked out — that is exactly why the work went deeper. The figure is right, the move impossible.

These must not be confused. The first two moves are about accounting and sales. The third is about geology, and accounting will not help there.

A scenario is judged by feasibility, not by its sum.

“At first I put six hundred and forty thousand into the next quarter's plan. The section head looked and said one word: worked out. The top bench reserves are gone, there is nowhere to move volume from. I took the line out of the plan.”

What the owner decided

Vasyl chose the first two moves and dropped the third from the plan. He put the decision into three changes in the accounts. The bench appeared in the work order. Cubic metres of overburden began to be tied to a bench. Fractions were measured by share sold, not by tonnes.

• Margin went by bench. 117 ₴, 89 ₴ and 37 ₴ a tonne — three figures instead of one, and it is clear which bench carries the month.
• The sampler became part of the accounts. Samples show the actual yield, and the share of screenings stopped being a guess.
• The spoil heap got a price. The cone under the canopy now weighs 22 ₴ on every tonne of rock, and it is reviewed weekly.
• Plans stopped coming from the crusher. Plant capacity is a ceiling, not a plan. The plan comes from what customers will take.

No new equipment and no new deposit were needed for this. What was needed was to see the bench and the fraction as lines in the cost.

The machinery stayed the same, the work schedule too. What changed is the breakdown through which the same figures are read.

The decision cost a quarter of work and a dedicated manager for screenings and rubble stone. Vasyl gave up the second dump truck this season: the money went into a finished-product yard.

Every month he watches two indicators. The first is margin per tonne on each bench. The second is the share sold of each fraction.

The monthly measure: face margin and share sold.

Takeaway for owners. Where the raw material lies at different depths, unit cost is never one figure. It is its own at every face. The difference is made not by technology, but by how much waste must come off above the deposit. Count margin per unit separately for each source. Then look at which part of the output goes into demand and which into the heap. Any extractive or processing business works the same way: sand, clay, peat, logging, woodworking.

Advice at the end

• Split cost by bench. 195 ₴, 223 ₴ and 275 ₴ are three different economics, not a rounding error.
• Put the bench in the work order. While it is missing from the document, no report will give you margin per tonne.
• Tie cubic metres of overburden to the face. The excavator works every bench, but the cost belongs to a particular face. The surveyor knows the cubic metres, and that is ready data.
• Measure fractions by share sold. Tonnes under the canopy say nothing. But 50% against 100% shows where the money lies.
• Count the gap between potential and actual revenue per tonne. 334 ₴ against 312 ₴ is the same 22 ₴.
• Look for demand to fit the fraction the rock gives. Screenings and rubble stone have their own customers. Nobody looked for them, because the fraction weighed nothing in the accounts.
• Do not plan from plant capacity. The crusher does not know how many orders for rubble stone you hold.

Money does not vanish — you just do not see it

People think a quarry is decided by reserves and the price of crushed stone. In fact those decide whether the quarry works at all. What it earns is decided by something else.

Two things decide it: which bench the tonne came from, and where each fraction went. Neither is visible in the bottom line. The line shows 636 000 ₴ of profit, and it shows the truth.

This can be seen only in a breakdown. A tonne from the top bench and a tonne from the bottom are two different goods at one price. The fraction that shipped and the fraction that went over the edge are the same case.

Once bench and fraction become lines, the main thing shows. 5.66% is not the quarry's ceiling. It is its result with a heap dearer than profit, and with tonnes from the dearest bench.

How to see this at your own quarry

Everything above rests on one breakdown: not the quarry as a single cost, but each horizon as a row, with its stripping ratio, its processing and its margin per tonne side by side. As long as one cost figure covers them all, you see neither that horizon C is dearer than A purely because of stripping, nor that 22 ₴ of every tonne has already been paid for and is lying in the spoil heap. When the same data is collected automatically, the margin per tonne of each horizon and the share sold of each fraction become visible — which is exactly why owners of small and medium businesses use Finmap: to see the financial picture rather than assemble it after the fact.

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Topic foundation: Management Accounting Explained: What It Is and Why Owners Need It