Excerpts from the report: The practice of basing prices for Class II milk (surplus fluid milk) on prices paid for milk by local unregulated manufacturing plants has been open to question. This questioning is based on the premise that prices paid for manufacturing milk in this region have been lower than prices paid for milk for similar uses in the North Central States. This study was undertaken, therefore, to provide: (1) An analysis of the costs of producing butter and nonfat dry milk in six selected plants in this area; and (2) an explanation of the regional differences in prices paid for manufacturing milk. The six multiple-product processing plants in this study were visited, and detailed information concerning their facilities and operations was obtained from their records, by observation, and by interview. The data included milk and cream receipts; costs of milk procurement, personnel, machinery and equipment, plant supplies, raw materials (other than milk), utilities (fuel, electricity, water), and general administration; utilization of butterfat and skim milk; and net sales.