Document 208334
HOW
TO
FIND
Costs
Manufacturing
AND
Selling
Costs
BY
LESLIE
UNCKLESS
"t
COST
ACCOUNTANT
OF
AND
PUBLISHED
BY
MODERN
SYSTEMS
OFFICE
FIRST
DEVISER
EDITION
METHODS
DETROIT,
PUBLISHING
MICH.
COMPANY
LESLIE
1909,
COPYRIGHT,
BY
RESERVED
Aw,
RIGHTS
UNCKLESS
CONTENTS
PAGE;
How
to
Getting
Get
New
All
the
Average
Ideas
4
Information
9
Cost
10
Follow-up
ii
Labor
13
for
Methods
Piece
Payment
15
Work
15
16
Plan
Premium
Contract
Work
17
Time
17
of
Classification
18
Material
Estimates
22
Time
25
Cost
Cards
28
of Material
Classification
Expense
of Office
29
System
30
Cost
by Lots
31
Some
Items
of
Indirect
Experimental Work,
Labor
Expense
33
Designing, Etc
34
36
Patterns
Handling
Various
Salesmen's
Accounts
Relating
to
Costs
39
46
Accounts
.
46
Shop Orders
Indexing Orders
Stock
49
Room
50
Reports
Returned
Changing
Continuous
Receiving
51
Goods
of
54
Prices
57
Factories
Process
Department
239126
.
58
58
iv
CONTENTS
PAGE;
Basis
of
Rush
Orders
Apportionment
62
64
Power
Water
66
Fund
Sinking
66
Expense
Administration
67
Rent
67
Depreciation
68
Freight
and
Demurrage
69
Discount
71
Patents
and
Royalties
71
Burden
Heat,
73
Light
and
Power
75
Account
Cartage
Mechanical
78
Appliances
Loose-Leaf
Books
79
and
Card
Systems
Purchasing
Claims
How
83
How
and
to
82
File
to
Claims
Handle
Them
84
89
HOW
FIND
TO
MANUFACTURING
COSTS
SELLING
BY
COSTS
LL5LIL
UNCKLL55
ACCOUNTANT
COST-
AND
AND
AND
DEVISER
FACTORY
OF
OFFICE
to
every
SYSTEMS
INTRODUCTION
The
and
while
this, there
are
principle, the
Material
In
the
the
basic
cost
to
costing
was
probable
days
it is
but
know
and
know
to
made,
and
cost,
which
Now
there
out
their
costs,
this
work
is
and
to
not
be
of
experience gained
of
many
different
only
their
with
the
the
in advance
do
not
figure
contained
final, it is
cost
after
estimate.
an
who
goods
accounting
the
in
outcome
departments
concerns.
cost
the
figure
information
considered
subject naturally
Manufacturing
do
manufacturers
of
possible
to
tion
atten-
it became
manufacture
cases
the
the
keener
as
given
not
was
required making
in
plus
Labor
given
grew
soon
as
while
underlying
is that
not
was
the
in many
few
are
It
much
how
the
realize
cost.
competition
as
learn
to
accounting
now.
turer,
manufac-
manufacturers
cost, which
earlier
deserved,
The
of
law
one
most
have
equals
the
material
that
who
many
vital
a
plus Expense
necessary
was
is
cost
it is true
consideration
it
of
question
and
divides
itself
Selling cost,
manufacture
the
of goods,
into
two
first
the
parts.
having
to
with
second
sale.
Both
consist
largely
of
expense
items,
but
in
this
2
MANUFACTURING
connection
it is well
the
to
considered
and
Material
taken
of
care
be
work
expenses
In
loss.
as
or
and
considered
the
in other
that
business
any
be
may
yet, from
fact
the
are
not
are
not
be
truth, all Labor
they
they
ways,
sary
neces-
should
under
that
are
of
head
easily
more
ered
usually consid-
the head
under
can
of
unessential
as
expense,
consider
to
conduct
COSTS
of expense.
Some
labor and material
direct to an
article,which
simplifiesthe
charged
of
the
are
required in
not
exist,do
in
department, while
cost
the
factory,and
admit
not
of such
items
some
without
which
it could
They
treatment.
which
be
must
and
that point be disfrom
tributed
general account
usually by percentages, according to a definite
plan of apportionment which has been arranged.
The following chart shows
the various
divisions and
subdivisions
lishment.
which, in total,form a manufacturing estab-
placed
a
In the small
executive
force, but
portion of
a
relations
In
they bear
this chart
certain
a
owner
costs
are
in the
and
known
that
larger
and
the
observed.
and
the
under
gate
dele-
must
recognized
come
various
he
grows
natural, and
with
the whole
be
may
others,
are
each other
is but
extent
to
shown
find that
we
accounting, which
to
this work
to
the
his business
as
divisions
the
concerns
plant
head
of
it is connected
other
parts
of
the
work
of
concern.
To
taking
and
this
the data
stock
information
creative
department
or
primarily belongs
the
furnished
b)rthe timekeeping, accounting
departments, arranging and tabulating this
the
net
imaginative in
the
to
show
considered, yet it affords
an
There
is
nothing
propositionas it is generally
unusual
opportunity for the
results.
for his acts and is not
requires reasons
content
to do a thing in a certain
merely because
way
somebody "always did it that way." The enterprising
will weigh the acts of his predecessor and his own
man
cost
clerk
who
AND
SELLING
well, satisfyhimself
as
and
if he
finds that
he will
To
correct.
cost
be
they
accounting-is
lookout
Stoo
a
II
Superintendent
[
is
methods
in
valuable
lAcc o^
K
|~6oo
Hgr.
j[Tj^e
Salesman
pers
Kee
Kgeyer.5
|Cost
|
WorKmery
which
Treas.
Secy,
Sales
ing,
reason-
]
Sales
A|
system
it,
cl
hoi
V.Presdt.
actunng
correct
improved
yourself a more
Directors
Tlanuf
lack of
or
for
of
K
on
substitute
make
to
based
not
are
and
the
on
3
to their soundness
as
rejectthem
COSTS
Clerk
(Stenographer
OF
CHART
DIVISIONS
employe,
or
himself
a
bigger business.
cannot
be
methods
in
of
an
Perhaps
to you,
may
this treatise
employer,
system
is
so
build
to
adopted
on
costs
but the ideas will be
at
for
good that it
improve the
suggestions to
are
usually welcomed,
and
be
an
No
institution
not
SUB-DIVISIONS.
of
case
improved,
though they
new
the
AND
even
once.
will contain
expressed
in
a
way
nothing
which
4
.MANUFACTURING
should
make
is open
to
them
TO
law
GET
case,
between
the
the
the
various
cost
cost
absolutely
are
what
plus Labor
principlesof
its manufacture.
complex
or
IDEAS
Material
"
They
matter
no
is
and
change.
not
NEW
of costs
Expense equals Cost,
every
study of anybody who
suggestion.
basic
do
of the
worthy
HOW
The
COSTS
product
The
systems
ing
account-
similar
how
or
plus
simple
difference
only
offered
be
must
in
then
in the
application of the underlying principlesof the science,or,
in
some
cases,
since
some
always
of
the
accounts
detriment
eventually in
While
consider
not
them,
a
as
the
on
this respect,
meeting
defeats
There
isn't
that he
will be
some
it is necessary
further
to
as
give
ideas
the
credit
A
for
for
for
an
the
office who
a
an
for
be
kind
should
be
"knockfest"
A
called.
was
of
devoid
nality
origi-
good suggestion. Possibly
to
secure
anything
of value
the bad.
do
men
an
not
As
a
like
individual,
generally not given to the
meeting on the contrary gives each
them
is
ical
Period-
opportunity
meeting
so
get
in
rule.
is
to
to
best
of that
general meeting,
the
open
but
it is well
to
suggestions in private to
for
time,
a
within.
separate the good from
to
originator. The
is the
which
valueless, but
or
Manipulation
seem
given
meeting
make
cannot
reason
force
is
there
in
man
and
extent
ideas, but how
new
built from
be
suggestion
object
a
certain
a
bankruptcy
executive
ideas.
where
the
should
the
application,
pyrotechnic finish.
a
thus
as
interchangingof
a
off
the benefit of
business
of
to
of
subject of Organization
only
meetings
them
absence
of their business.
stave
may
the
say
ignore
men
to
results
might
we
AND
SELLING
opportunity to get credit
and just what
just what he wants
man
an
To
profitor
the
end
of the
loss for the
year
is not
know
at
5
COSTS
for
he
year
his ideas, whkh
should
what
enough.
is
have.
has
been
Monthly
the
state-
MANUFACTURING
should
ments
the
be
required showing
manufacturer
certainty can
know
automobile, it
The
engine, body,
that
be
must
group
if the
meant
by
every
case,
time
of costs
matter
that
as
is not
enough
REPORT
of
cost
different
be
etc., must
available
cost
a
although
or
cost
that may
desirable
to
at
a
to
a
small
as
total
cost
per
CASTINGS.
such
as
frame,
back
well, and
of
of separate parts of each
is to
must
OF
groups
known
the cost
system
and
the
COST
ON
down
is,for instance, an
know
to
loss,and
profitor
net
article manufactured
this that
necessarv
the
often
as
COMPARATIVE
machine.
has
who
If the
expense.
COSTS
be
be
a
success.
figured on
be done, but
know
that
It is not
each
part in
if it is at any
cost, the system
SELLING
AND
of its
admit
should
making
exhaustive
an
Cost
keeping
of red
tape
formula
be
might
it is
the
of
cost
all.
at
clear
steer
to
as
The
lowing
fol-
automobile
an
:
Cost
of parts of
Cost
of groups
a
cost
plus
cost
=
assembling
the
words,
groups
group
+
parts equals the
different
system
well
as
important
cost
a
extremes
to
quite as
explains how
shown
In other
the
carried
be
it is to have
as
necessityof
the
research.
can
anything else,and
without
shown
being
7
COSTS
"
something, the
costs
part
of group.
of machine.
cost
of the group,
the
and
the
of the
cost
the
assembling equals
of
sum
cost
of
machine.
the
for
Suppose,
engines for an
while
each
example,
automobile
the
estimate
and
figuring the cost of
that they cost $150.00
are
we
find
is $100.00
each,
increase
an
of
unsatisfactory. The question,
"where
is the increase?"
naturallyarises and it becomes
be
to analyze this particularcost, which
may
necessary
about in the following way :
gone
A
list of the parts constitutingthe engine is made
the estimated
looked
and
out
cost
Considering first
up.
the cylinder,we
that the cost is made
will suppose
up as
and
50%
follows
of
course
very
:
ESTIMATE
COST
$4.00
$3.50
Labor
7.00
7.00
Expense
7.25
7.00
Material
Total
Though
of
75
estimate
the
on
at
The
the end, if the
find that the net
Now,
$17.50, there
and
so
difference
found
of increase
where
on
is
an
the
have
increase
the
throughout
will be shown
calculations
amount
having
is
engine
each
list of parts.
whole
and
cents
$I7-5o
$18.25
been
on
each,
correct,
we
is $50.00.
increase
is, the
next
8
MANUFACTURING
COSTS
question is,"why the increase?," which
explained by the foreman having the work
increase
any
in expense
material
or
revised
be
in cost
the
to
"piece work," no
occur
by reason
may
as
labor
some
will pay
in that
posted
Where
should
of defective
done, for
parts
down
the
this work
found
on
which
"day work,"
forms
employe
per
of
estimate
and
the
which
ever,
howto
the
work
of
will
throughout
possiblecomparisons
previous
costs,
and
these
are
of
of great value.
course
and
is for
All
the
parts
some
other.
no
into
labor 1
charges
particular article Y Labor
J
direct labor
All
which
material
"
directly entering ]
construction
of
for it
purchased
an
used
or
article, }"Material
it. J
on
j
Manufacturing
Cost
All items
without
which
but
of
not
enter
such
In
way.
and
keep
systems described
and
will,if followed, make
with
be
timekeeping department
of good pieces delivered
will keep the timekeeper
is done
work
production
The
the cost.
of cost
the work
respect.
part of the
up
should
the
it is very likelythat increases will occur
foreman
in charge belongs to a great extent
keeping
be
charge, provided
If changes
figures. If
increase
only for the number
inspection department
the
and
has been
is found.
correct
is all done
except
in
to
discovered, the estimate
are
conform
to
of labor
will have
nature
and
material
be made,
that they do
not
into the article in a direct
other
words, all material
labor
longing
a
of labor
it could
used
to
in
either
factory not
a
of
the
first
betwo
classes.
CHART
i
^
[
}
^"xPense
I
|
J
SHOWING
THE
WHICH
THREE
GENERAL
EVERYTHING
A
COST
MAY
ENTERING
BE
DIVIDED.
CLASSES
INTO
INTO
SELLING
AND
GETTING
In
know
enough
to
pounds
produced
certain
there
and
that
be
to
figuring a
Are
used
At
total
is not
number
of
charges equaled
in with
in
line
the
the
there
of
a
only
is the
investigation
as
follows
job
in stock
about
for this
cores
any
be
may
foundries
most
and
be
would
:
which
will
later?
the
close
of the month
poured,
not
month's
the
cost
the
information
clerk
in any
When
establishment
of
received
all the
data
should
but
in
went
correct
not
only
have
the
enable
to
all the information
has
been
cost
and
required
figure a
to
charges
should
business
the
he has
able
molds
any
the labor
given him,
requisiteknowledge
when
which
on
there
were
production, etc.?
The
will be
instances, it
considered
cost
there
the foundry
know
certain
a
were
the
some
required,but
inventory
use
INFORMATION
castings,for instance,it
that
in
do
may
information
be
of
cost
9
amount.
This
in
THE
ALL
figuringthe
COSTS
him
to
necessary.
furnished,
until
not
he
that
time.
It makes
ends
the
be
must
cost
will be
be
done,
be
overlooked.
The
gathered
department
omissions
your
difference
no
so
mind,
noticed
the
To
and
printed
be
where
will be
fix the
importance
is
charges
Less
inventory
less value
"
charges
are
here
easy
of
to
any
should
anything
of these
to
facts in
given :
inventory
is where
that
possiblethis
for
in
used
forms
printed so
excuse
no
following formula
Total
total
The
up.
loose
product, the
the
sometimes
may
that there
what
the
get, but
=
cost.
trouble
the
often
inventory
is.
is
10
MANUFACTURING
often
overlooked,
if
or
COSTS
taken, is sometimes
figured
not
properly.
The
what
correct
the
at
a
have
have
cost
and
higher figure
than
a
Average
of
be
will cost
cents
may
cost
iron
whatever
in
on
business
one
it.
to
know
average
has
could
be
pound
per
a
the
at
fifteen cents
kind
just
to
way
cost
per
each
figurethat
to
cost
this
average
Some
ings
cast-
shipping
room
pound, and
per
the
is necessary.
the
is that
is made
be
should
matters
to
lower
casting the
the
taken
up
cost
when
in
thing to be considered
small
pieces require more
do large
of castings than
produce a ton
larger part goes back
worth
looking into.
contract
a
the
great mistake.
a
to
item
an
If
accurate
Another
is made.
foundry
pieces, for
these
but
pound,
this is
make
rule, the heavier
a
melted
to
of each
cost
the estimate
the
rarely an
production, yet
three
scales,others
per
toried
inven-
is sometimes
is
castings produced
would
As
wish
month's
of each
separate
duplicate lot
production
or
but
know,
to
figure cost's.
A
foundry might
amount
be
COST
of output
cost
good thing
pound
it is
rather
should
nothing
AVERAGE
pound
but
cost,
always
for.
produced
a
is not
inventory
an
represented
parts
they should
what
of
amount
to
furnish
remelted
be
customer
a
and
with
castingshe requires,the cost may be considered
lot,that is,charge the job with everything used
be
It must
castings
pieces of
ordered
are
figured in
remembered,
the
each
in
the
same
the
cost
is apt
unless
proportion, they
estimate, that is, for the
kind
that
however,
to
same
be
number
the
are
of
unsatisfactory
and
this naturally leads
certain
of
grouping
together.
COSTS
SELLING
AND
subdivision
the
to
pieces
11
and
of
job, the
a
figuring costs
them
on
FOLLOW-UP
To
keep
from
in process
requiresextra
that
warrant
serve
them
account
an
time
the
showing
the location
they are
started
of all parts
assembled
until
instances
labor, but the results will in many
will
In a bicyclefactory, which
being done.
ber
anything else, the numof parts is so large that a system is required to keep
moving through the factory and the following plan
used
was
illustration
an
as
well
as
:
The
issued
order
department
different parts required and
book
a
was
kept, one page
and
part ordered
of
care
as
the
season's
a
of which
used
was
for
each
to
take
large enough
were
in most
orders
the
superintendent'soffice
in the
pages
for
orders
shop
The
cases.
provided one for each operation of
written in
of the operations were
part and the names
when
the order was
columns
placed.
proper
in
columns
Take
a
page
illustration
an
as
1000
7-tooth 3/1 6"
Shop
Order
would
be
work
the
to
do
punch
on
in the
in the
how
work
much
for
one
lot and
the
being kept
entering it
ordered.
were
out,
room
sprocket of
rear
which
arrival
On
of
the
the
say
the
office auxiliaryorders
superintendent's
in the
made
a
of
number
to
start
one
work
each
of these
on
would
the
superintendent'soffice
stock
he
has
book.
in
Each
having
foreman
be
any
sent
to
job, the original
be
to
foreman
view, although
some
filed after
then
knows
time
will
the receiptof the order and the receiptof
elapse between
is marked
If the order
the
partly finished material.
from
the
be taken
"Rush,"
part of the sprockets may
hurried
and
through the other operations,but in
press
12
MANUFACTURING
deliveries
case
every
be
must
form
is made
from
A
signed for.
COSTS
one
department
ticket similar
to
the
to
another
ing
accompany-
in
and
the department
triplicate
receiving them is required to sign for them.
Once
tickets are written up. That is,they
a day these
out
NO.
DATE.
DELIVERED
THE
DELPT.
TO
FOLLOWIN6
FOREMAN
DEPT.
RECEIVED
BX
FOR
FORM
TICKET
FOR
DELIVERIES
TO
FROM
MENT
DEPART-
ONE
ANOTHER.
auxiliaryorder by the department
deliveringthem and are also placed in the "received"
in the department receiving them.
column
of the order
of parts and
of the receiptis left in the box
One
copy
are
entered
on
the
the stub is retained
books
are
provided
proper
in the
foreman's
for each
book.
department and
Two
one
of these
is in
use
MANUFACTURING
14
manufacturer
COSTS
it
properly. A record should be
kept of every employe and the accompanying form shows
in substance
the information
usually required on records
The
of this kind.
employe should
sign this record, so
that if necessary
time the
to identifyhis signature at any
record
to
RECORD
No.
OF
EMPLOYES
NAME
ADDRESS
AGE
OR
SINGLE.
PREVIOUSLY
EMPLOYED
REASON
DISCHARGED
DATE
W"TH
|QuiT
EMPLOYED
REMARKS
SIGNATURE
peculiar to
be incorporated in
the requirements of a business
may
mined
The employe's value is deterdesired.
these records
as
of supervisionhe
to a great extent
by the amount
a
who, when
men
job has been
requires.There are some
card
may
be
given them,
on,
referred
take
gettingthe
proper
time.
to.
entire
work
These
Any
of the matter
care
out
men,
information
in the
on
way
proper
account
from
of
that time
and
at
the
requiring little
SELLING
AND
valuable
supervision,are more
constantly watched
work
are
worth
They
FOR
methods
various
considered
Day
2.
Piece
3.
Premium
4.
Contract.
5.
Profit
that
time.
and
is
Of
the
hours
than
This
if
a
the
shirks to any
man
his
slow
out
is
until he
what
to
amount
shall receive,
thorough
workmen
one.
each
of
and
much
is
employe
of
help
to
to
of this time
kept busy.
work, the temptation to
given something else
be
he
fixed
different
The
man.
pay
the alert and
do
stand
vise
super-
is taken
If
a
day
around
is sometimes
too
resisted.
PIECE
or
of the
extent
are
in the
and
plan requires a large amount
runs
great
job. Wages
done
determines
give
to
seeing that
The
:
day work
the
loses
direct the workmen
worker
strong
out
fair
are
plan. This is
certain amount
for a specified
lations
stipuspent in the factory,with no
much
work
is to be done
during
course,
he turns
only
paying employes
manufacturing establishments
using
employe a
-are
just how
to
in
used
sharing.
discovered, he
of work
in
they
PAYMENT
according to the class of work
classes according to the value
up
because
plan.
of
the
of
as
and
step with
new
pay
be
to
work.
present time
number
more
more
have
work.
1.
great many
it is
each
following heads
the
under
simply paying
as
who
more.
The
of the
15
men
as
receive
METHODS
A
than
directed
and
is taken.
the
COSTS
piece work
piece manufactured
WORK
plan places a price on
and
the
employe
is
operation
paid according
each
16
to
MANUFACTURING
the
for
the work
is
be
of
number
charged
pieces he turns in. In some
he is
cases
the pieces he spoils. The temptation to slight
so
great that a rigid inspectionsystem must
where
this plan is used, in order
that
to see
installed
the count
is correct
This
should
plan
since there
COSTS
is
and
that
result in
incentive
the
more
work
is properly done.
for
money
for him
the workman
benefits the
speed up, and it also
employer by increasingthe production without
adding
the
an
to
thus
manufacturing expense,
decreasing
and
cost
his
increasing profit. The employer who sees
workmen
than their day work
rate is somemaking more
times
tempted to cut pricesand the employe puts on more
and
will make
steam
possibly as much
as
before, which
to
in another
results
in
spiteof
his extra
littleif any
When
cut.
the
exertion
price gets
the workman
can
than
regular pay while
naturally gets discouraged and quits and
the job may
have to be given day work
the
work
more
done
at
for if the workman
is to invite
big day's work
stay
the safe side and
on
that
make
but
he
day work,
on
the
next
man
in order
on
to
get
all.
Cutting piece prices spoilsall
this system,
low
so
a
the
thinks
there
good
that to
is in
turn
in
a
in
prices,he will naturally
only enough to avoid a cut.
prices it is advisable to run
cut
do
establishingpiece work
through a lot of "day work" and from the results of this
such a
determine
a
on
price for the operations,and once
this
price is established,do not change it. Of course,
In
be
cannot
pay
in
is
ability,
it and
the
firm
able
to
him
employing
who,
man
well
can
by
another, is
than
more
earn
afford
to
it.
PREMIUM
The
employe
extra
the
instance, but
every
of his
reason
werth
done
premium
plan
is that
receives, in addition
amount
for
doing
PLAN
more
arrangement
to
the
than
wages
what
has
whereby
paid him,
been
named
an
an
SELLING
AND
COSTS
day's work, or for completing a
The
specifiedtime.
proportion of
plan is not large, yet it possesses
as
17
task
a
in less than
factories
some
using
the
this
attractive
very
features.
CONTRACT
It is doubtful
much
him
benefit
to
he
the
contractor
than
is
To
it releases
be sure,
of
ever
from
supervising the work, but
for this item in the contract
price,as
pays
is rarelysatisfied unless he is making more
extent
maintain
that
manufacturer
the
better
in factories
foreman.
a
To
to
work
to the manufacturer.
than
more
if contract
certain
a
WORK
executive
advantage
the contract
is to
admit
abilityand
the
regular
than
can
system
that
the
advantage
has
contractor
better
to
men
manage
foreman
is of
superintendent
admission
which
few proprietors would
to
an
care
can,
The most
make.
noticeable
disadvantage in this system
is,that it prohibitsa knowledge of the cost of different
A
certain
price is paid for
operations being known.
of different things and to figure out just
doing a number
what
is paid for each is practically
out
impossible,and withabsolute knowledge of the cost of each operation
an
is getting value received from
its cost departno
concern
ment.
or
TIME
time
in
best Time
One
of the
of
employes
each
in the
department,
systems
for
factory is
to
whose
duty it is
taking
have
to
a
of the
care
timekeeper
furnish
a
man
the
job is started, which shows
number
and
of the job, the time commenced
name
or
in the time completed is noted
when
the ticket is turned
These
thereon.
tickets may
'be assorted
daily as to job
and after the cost of the jobs is figuredthey may
numbers
with
be
a
ticket each
time
a
rearranged by the timekeeping department
and
entered
18
MANUFACTURING
the time
on
of the
book. Machines
detail work
where
and
turned
it
makes
out
in
besides
WORKMAN'5
be
may
time
size of the
the
economical
JOB
COSTS
to do
purchased
keeping- and
cost
plant
volume
possible
to
the
or
accounting,
of
them, they
use
much
work
are
very
being absolutely accurate.
NAME
NO.
NAME
NO.
OPERATION
TIME
STARTED
NO.
Tine
FINISHED
PRICE
TIME
WORKED
TOTAL
DATE
PIECES
for
Material
stock
room
foreman, which
transaction.
office
daily and
tickets may
then
only
from
drawn
be
the
requisitionproperly signed by
a
gives
the
These
entered
be
MATERIAL
OF
article should
an
on
RECORD
JOB
INDIVIDUAL
CLASSIFICATION
the
PIECE
OK
FOR
the
PER
required information
tickets
in the
assorted
should
stock
be
taken
book, form
according
to
regarding
the
the
to
7.
job
The
num-
hers
to
articles to
or
found
and
STOCK
The
in
monthly
the
various
and
the
of the
same
a
accounts
time
form
be
merely a perpetual
figured up and the
it is
REQUISITION.
balances
to
is made
and
book
classification of
of such
amount
may
is
book
ROOM
keeping this
clerk
tickets
be
may
brought
if desired.
often
more
if it is necessary
the
job
a
month
a
FOR
stock
19
that
so
brought down, although
balance
the
once
6,
FORM
hand
charged,
together. The
all
inventory
down
be
charges against
the
know
COSTS
SELLING
AND
these
be
should
for
charges. Form
monthly by
may
be
to
shows
material
drawn
8.
the
required
which
charges
charged
forms
be
A
tion
classifica-
timekeeper
placed
on
in binders
20
MANUFACTURING
COSTS
22
MANUFACTURING
and
used
copy
them
COSTS
makes
journals, which
into the regular journal.
it unnecessary
as
to
ESTIMATES
In
on
order
article is
an
know
to
low
as
refer to the estimated
be lower
than
high. Some
this is
no
it should
as
goods
preceding
afford
why
a
the
not
or
be, it is
Each
sheet.
cost
of the
any
reason
positivelywhether
necessary
to
figuredmight
cost
still be too
and
costs
cost
a
larger profitthan others, but
should
cost
not
be
accurately
known.
Guesswork
the
them.
estimate
It is
has
should
no
place in the figuringof
never
auxiliaryto
be
used
the cost
and
as
a
while
and
costs
substitute
not
of
for
equal
importance
which
are
perhaps,
too
high.
it yet
used
which
form
should
These
may
be
item
As
of
the
represents
be
is for
Total
and
in
for that purpose.
of
material, the footing^
of the
cost
blank
considered
be
provided
a
five columns.
or
to
costs
on
estimate
four
has
check
a
an
up
needs
may
the first column
column
as
making
expense
columns
classes, extra
serves
Material,Labor, Expense
be headed
if the
and
In
23
COSTS
SELLING
AND
material
in the
this
article
'how
in turn
show
just
footings of the other columns
much
labor, manufacturing expense,
etc., should go
into
the
and
the
cost.
To
is used
take
illustrate,
for
low
a
The
heating houses.
weighs 300 pounds which, at
gives three dollars ($3.00)
This piece requiresa certain
amount
of
core
sand
value of
all
these
is entered
is all the
should
what
and
of
place
one
cent
in the
will say,
we
per
pound,
first column.
of
number
material.
figured for
be
to
dome,
steam
cost
a
iron boiler that
chaplets,a certain
The
oil or
core
compound.
under material.
Possibly this
piece, so that the total shows
in this
material
cast
pressure
sand
to
charge the cost of core
rather
than
Foundry Manufacturing expense,
try to
each casting or job, but to do
used
on
figure the amount
to
this is to charge indirectlya portion of the expense
which, of course,
gives
castings that require no cores
ings,
castmisleading and inaccurate costs, too high on some
be
cost
too low
on
others, although the average
may
The labor of making the cores
and the cost of
the same.
molding can be estimated and placed in the labor column
Some
and
a
founders
certain
plus material
column, while
is
placed
This
the
total
of the labor
percentage
is
the
in the
computed
and
placed
column
plan
is followed
cost
of
each
on
under
in
the
a
basis
expense
for the dome
head
part of the
each
part gives
the
of the labor
or
columns
total of the three
fourth
cost
to
of Total.
heater
and
figure what
24
MANUFACTURING
repairs shall
be
permits
way
it be
should
be than
molders
of
set
and
the
heavier,
easier
to
loss
these
clerk
costs
they
best
course
be
arrive
to the
done,
for
to
some
giving
the
be
results
contrary
a
be
the
cost
which
a
job
much
it
arbor
then
and
sible
respon-
proper
of
estimates
by
can
the
be
be
must
it is of
and
within
this cannot
where
is little
attention
there
estimates
is considered
outlined
cost
kind.
that
which
I hold
herein
itself and
secured
of
waste
inaccurate.
as
get
superintendent,since
instances
and
should
estimate
its part of the cost
subject of
estimate
check
only
or
somebody
superfluous operation,a
in usefulness
on
or
reasonable
given
exceeded
a
estimates
information
furnish
misleading
the
from
and
amount
of
an
up
foreman
may
The
error.
found.
finds
and
than
better
are
factory to keep
if it is
but
centage
per-
the
on
chaplets
certain
a
making
at
There
estimate.
a
be
and
puting
com-
castings
similarityof operation
a
By
running heavy.
the
fitted to
to
up
chance
by
from
is often
considered
in
the
the
good practice to figure
the attention
to
castings are
his labor
There
weigh
what
man
his
set
made,
section
year
workman
a
considered
to
matter
cost
are
to
figures. Weights
if the
The
than
It is not
call the
then
good
as
a
may
little loss
and
of
in this
adding
after
another
greater
core
castings ought
use
the
be
is not
file the
Put
weight.
may
he
as
correctly.
that
in
be
it is:
what
weight
will be
to
know
to
castings year
there
patterns and
cost
casting and
a
approximate
will make
slightvariation
only
of
contents
figured
weight
average
know
to
an
the
it is better
easily,but
for strain,
Some
The
necessary.
cubic
the
estimate
an
thorough analysisof
a
should
weight
for, and
sold
found
be
may
COSTS
in
no
time,
that
is
that
other
on
only
it is
way.
a
AND
SELLING
TIME
the
The
time
time
of employes.
form
card
FORM
each
turned
going
on
man
by him
in
at
This permits the
is not
careless
a
good
and
in
making
if
some
in
use.
out
other
is
One
commonly
is taken
TIME
in
his work
inaccurate
the cards
for
the
and
could
again
taking
a
iu
from
a
the
taking up
supply by
morning
his
the time
is
and
time, which
own
that he
reason
be
used
CARD.
night filled out.
employe to keep
plan, for
plan
25
CARDS
FOR
to
COSTS
is apt
to
get
spent by him
spent
to better
record
of the
advantage
time
were
MANUFACTURING
26
Another
record
and
in
does
remember,
give
the
cannot
of
amount
time
Of
each.
time
cards
time
must
them
to
and
of
the
book.
Some
the
pay
book
makes
it necessary
of
a
further
the
column
which
monthly
roll
pay
roll
by
for
each
to
use
and
which
to
write
employe
of
from
per
provides
classification
time,
is
be
to
times
twelve
and
year
an
intervals
to
one
for
of
name
at
workmen
form
time
only
and
book
factories
combined
the
from
has
due
into
on
where
copied
time
the
amount
the
spent
used,
are
copied
a
actual
course,
be
name
was
day before
the
if he
member
re-
he
jobs
on
the
as
always
cannot
working
the
This,
book.
the
he
ly
direct-
inaccurate,
employe
arid
time
time
is
too,
to
factory daily
the
the
is
plan
the
through
COSTS
be
having
a
account
charged.
have
the
timekeeper
go
AND
FORM
FOR
SELLING
COSTS
FOUNDRY
TIME
BOOK.
28
MANUFACTURING
This
the
is
excellent
an
factory having
that
its other
in the
way.
In
time
by
book
It is not
is often
truth, it
means
of
which
have
job
of time
saving
books
for
attempting
to
a
use
a
by its
timekeeping
right
the
and
pay
for
book
deal
great
cum-
handle
to
combined
the
month's
in the
about
in
large
so
classifya
to
but
on
be
to
defeated
be
of separate
of paper
the
and
time.
COST
of
cost
OF
MATERIAL
material
whatever
stock
waste
left-over
or
a
used,
accounts
it is gone
necessarilywastes
usually much
The
of
would
difficult
a
be
can
number
factory if
average
roll,instead
two,
large
a
it
good points would
bersomeness.
time
when
plan
the
general ledger,
COSTS
it takes
for
article is the
an
build
to
it Less the
pieces,providing
of
value
value
of the
this material
has
a
value.
The
lumber
owing
to
might
be
five
the
left-over
in the
cents
figured at
value
of
things
left
and
over
the
given
in
table
a
peculiar shape of
of the lumber
a
used
pieces which
manufacture
for that
this
rate
so
wise
proper
be
long
In
the
found
used,
by
the
as
be
manufacturer
attention
would
table is then
it will sometimes
can
some
of other
twenty-fivecents.
which
might
but
will
the
its parts
be
worth
but
there
twentyThe
articles.
it should
cost
$2.75
and
scrap
pieces represent
manufacture
these
cost
of
that
see
$3.00,
cost
there
cases
that
this
be
of other
is
are
nothing
unusual
question
department.
is
MANUFACTURING
30
their time
portion of
The
for
to
classification of
of
both
thus
these
COSTS
of these
each
office expense
and
as
departments
in turn.
then
provide
other
many
should
accounts
as
are
affected.
The
manufacturing cost should be kept in one account
and the sellingexpense
distributed
the goods sold
over
and shipped and at inventory time the sellingexpense
on
goods sold but not shipped, may
properly be considered
an
asset, as is also unexpired insurance and other matters
of that class.
Manufacturing
expense
be termed
may
the manufacture
the expenses
of
goods and sellingexpense,
incident to their sale. Up to the time goods
the expense
reach
the shipping room
ufacturing
they are subject to various manafter
this time
but
the
selling
expenses,
ence
is usually considered, although there is a differexpense
ends and the other begins.
of opinion as to where
one
but
in the shipping room
Goods
are
subject to expense,
incident
to
their value
other
but
is not
things are
should
increased
an
be added
not
which
expense
to
the
and
Rent, insurance
by them.
taken
be
must
of the
cost
care
of,
goods.
SYSTEM
is order"
''System
are
used
to
maintain
and
whatever
this
condition
forms
may
or
methods
rightfully
be
curacy
tends to confusion, inacsystematic and whatever
or
incompleteness is not deserving of the name
System.
records is
elaborate
The institution having the most
the most
systematic. Real System aids in
not necessarily
called
the transaction
so-called
systems
are.
where
one
of records
by
satisfactorily
A
cost
It is not
of business.
a
houses
Many
could
be
system should
have
to
do the
of the
just as
as
keeping two
are
made
rearrangement
hindrance
a
few
work
many
sets
more
forms.
different forms
SELLING
.VXD
as
will
properly
the
and
the
cost
handle
In
the
truth
31
under
matters
should
system
concern.
COSTS
in
work
they
should
consideration
with
be
the
of
books
merely auxiliary
found in totals
give in detail the information
in another
in the ledger. Considered
sheet
cost
a
way,
books
used in the
is merely a transcriptfrom the various
accounting department of a business.
books, which
COST
In
of
this method
LOTS
BY
figuring costs
is
cost
a
figured on
through the
the factory
comes
completeness of each lot which
factory. A certain quantity is ordered from
the
the
and
stock
material
it is drawn
make
to
necessary
from
the
there
will
room.
the order
When
few
usually be a
owing
to
stock
furnishes
has
parts
all been
run
hand
which
on
through
be
cannot
bled,
assem-
age,
shortage of other pieces caused by breakAn
the
etc.
inventory of these is taken and when
is deducted
from
is figured their value
the total
cost
charges shown by the ledger. The balance is the net cost
The
and having this it is easy to find the amount
made.
unit
book
is
information
that
and
the
cost
per
easily found.
By letteringthe lots Lot A, Lot B, etc., it is possible
to
lot before
the second
start
keep the
through
costs
separate
factory in
the
boxes, barrels
or
side tracked
and
shop
first is finished
work
if the
and
the
cars
the
proper
full of
is
kept moving
there
way
will be
when
no
material
partly finished
possibly overlooked
still
and
inventory
an
is taken.
The
which
of
is the
storeroom
is not
parts is
being
on
the
\vorked
proper
and
on
material
the fact that
quantity
shop floor should
shop order
for the article of which
issued
that
and
place to keep
it should
be
be
it is
a
evidence
a
part has
kept moving.
Men
that
a
been
and
32
MANUFACTURING
machines
the
be
must
result is
to
COSTS
kept busy
something
be
and
parts kept in motion
worth
while
in the
if
of
way
often made
that "No
profit. The statement
system is so
be improved," is very true and though
good that it cannot
the cost keeping is done
by the cost clerk, he usually has
little to say about
it, his work
being to take the
very
information
given him and from it to figureout the costs.
The cost clerk can
make
suggestions,however, if he finds
that things are
not
going as they should and may
ate
co-operforce to the advantage of the latter,
with the executive
if he is properly encouraged.
The various
work
in harmony to
departments must
the
secure
which
solved, few
be
cannot
There
results.
best
are
few
but
difficulties which
problems
be
cannot
organizationworking in the proper spirit.
be
friction should
No
permitted between
departments.
but friction produces wear
There may
be friendlyrivalry,
by
overcome
and
an
loss.
means
f
Cartage.
( Labor
material, other
\ Packing
standard
t
packages.
Shipping
Sales
Assistants
Manager,
their
and
than
Salesmen
and
expenses.
Advertising.
Selling Expense
\ part
of
Administration
in
expense
some
cases.
Commissions.
I
CHART
ACCOUNT
ACCOUNT.
of
Part
of
TO
books.
THE
THE
BE
account.
Stationery account.
OF
EXPENSE.
IS
Postage
Mileage
SOME
SHOWING.
SELLING
Part
CHARGED
ITEMS
TOTAL
WHICH
OF
PERIODICALLY
THIS
UP
MAKE
EXPENSE
TO
SALES
SELLING
AND
FOR
FORM
COSTS
TO
SALESMEN
33
TO
WEEKLY
MAIL
SALES
DEPARTMENT.
Chart
showing
of
some
the
The
total of
sellingexpenses.
be charged periodically
to sales
ITEMS
SOME
incident
material
the
a
should
to
the
is to
EXPENSE
distribution
material
the
common
delivered
of
to
is to apportion
way
this expense
the material
over
certain percentage to the cost of
delivered, by adding
material
the
to
take
of this expense.
care
WATCHMAN.
chargeable
each
to
"
This
general
article made
SPECIAL
"
of
or
expense
takes
POLICE.
item
its proper
^The
well
rule
enters
whole
as
many
is that
others
whatever
all
item
is
expense
that
expense
properly
of which
share.
superintendent, engineer,
firemen, oilers,electrician,gate tenders
as
up
account.
receipt and
charged to
requisitions.A
make
account
LABOR
be
factory on
which
this expense
INDIRECT
OF
Expenses
items
under
come
of
labor
indirectlyinto an article
plant, is to be charged to an
or
or
and
The
this head.
material
which
account
timekeepers
which
benefits
the
usually called
34
MANUFACTURING
Expense
General
from
and
Stock
departments and
A
foreman's
in his
done
each
of the
cost
be
must
the
benefits
basis
received, the
used
in
Pattern,Tool, Machine
Order
or
If
in that
then
is
all the
and
department
be
increases
and
department
an
plant
which
expense
in
proportion to,
Shop
other
some
on
or
goes
expense
shop.
RepairOrder.
6997
0
No.
a
Machine
the machine
than
work
should
foreman
occupied
space
of distribution, while
further
no
the
produced
time
his
part of the
by each
borne
account.
general .expense.
a
of
Expense
General
other.
no
not
sweeper
material
ous
the vari-
to
charge only against the
a
that
articles
distributed
in Process
a
as
and
there
It is
has
same
indirect labor
the
is
department.
the
charged
in
time
department
COSTS
[Foreman
190
_
'
Rep.acement
Make
IMPORTANT.
All
used
labor
charged
material
and
order
this
on
be
must
t h e
to
ORDER
NUMBER.
All-tabor
"
an"t-
must
be
itemized
back
of
this
must
agree
charged
time
and
-material
and
with
this
to
items
number
stock
books,
the
on
order,
Charge-
on
reports,
Invoices.
Return
this order
superintendent
work
to
whe
the
Supt.
the
is completed.
Order
Completed
Foreman
ICh.rge
.T.ryihi
number,
not
(o
the
,
"
!
tbe
order
190
ol the job.
EXPERIMENTAL
The
not
charges
always
easy
it is all loss and
Because
WORK,-
the
for
to
Correct
Supt.
experimental
work
in
apportion correctly.
in others
ETC.
DESIGNING,
something
designing department
a
In
is added
is located
factory are
cases
some
to
the assets.
in
the
pat-
AND
Report
of Labor
SHOWING
SELLING
and
Material Used
BACK
35
COSTS
OF
FORM
on
this Order.
15.
36
MANUFACTURING
tern
is
room
the
and
the pattern
why
reason
good plan to issue specialorders
it is completed charge the amount
a
when
to the accounts
that should
stand
jig is designed for a machine
be made, the dispositionof
different
from
A
order.
when
the tool
manufacturer
must
drafting,designing, etc.,
first order
have
he
or
will
out
the Stock
in Process
it shows
up
is,figurewhat
the
of which
it has
If
a
cost
special
thousands
to
are
the
charge will be entirely
is required only on
a special
get the cost of specialtools,
of the goods made
the
on
NEVER
get it.
of the
account
in the cost, make
cost
for that work
the expense.
If this work
required for articles regularly made,
entirelydifferent.
Some
manufacturers
charge the cost
when
should
room
of its maintenance.
expense
It is
no
COSTS
would
the
is
handling
of this work
is
to
and
article -it is for
allowance. for it ; that
be without
it.
PATTERNS
As
as
rule patterns
a
such.
Thus,
manufactured
assets
are
should
and
be
treated
required for an article to be
charged to the pattern account
the patterns
would
be
of that article.
The
confuse
they will not
charges are thus where
pen
anybody in figuringcosts and confusion might easilyhapif the patterns were
carried in the Manufacturing or
of the article. Repairs or replaceStock in Process account
ments
and these
accounts
are
charges to expense
proper
the
repairs or replacements should, as a rule, maintain
actual or insurable value, so that littleor no
depreciation
will have
case
a
to
be
pattern becomes
used, it should
to
be
charged
an
asset.
be
off from
out
charged
of date
off the
If the manufacture
discontinued, there would
be
no
In
the pattern accounts.
is
and
books,
of
an
further
no
as
longer to
it has
ceased
article should
use
for the
be
be
tools,
38
MANUFACTURING
In
such
'whole
the
COSTS
should
"
be
charged to the job.
In bidding on
work
which
requires specialtools or
in the price quoted,
be included
patterns, their cost must
either as a separate charge or included
in the lump sum
it
little difference how
price or price per unit. It makes
In making patterns the
is done, so long as it IS done.
case
burden
or
expense
cost
is not
great
so
as
in many
other
parts
factory,and this should be taken into consideration
when
making up the basis of apportionment. The pattern
rarely includes any item of material, since practically
expense
be charged directlyto the
nail and screw
can
every
to be apporjob on which it is used and not as expense
tioned
fore,
It is,therethe entire product of the room.
over
of the
advisable
share
will of
which
expense,
any
The
head
of
be
course
etc., but
material
the
for
account
an
Power,
of Heat,
bear
have
to
charged
of
other
room
its proper
with
will
which
expense
pattern
not
have
to
departments.
his time
pattern maker, except in largershops, can divide
the different jobs better, as a rule, than
among
the
keeper
cost
afterwards
by charging it all to
the various
distributingit over
determined
by each manufacturer
must
be
as
absolute
no
can,
rule
can
for all material
manufactured
is
to
stock
himself,
Credit
ACCOUNT
STORES
which
for
This
ACCOUNT
Debit
Debit
orders.
be made.
OF
NAME
and
expense
enter
into
at
later.
ever
value of whatstock
room
from
drawn
dling.
hanof
cost
plus expense
Credit
ceived
re-
for
LABOR
Charge
,to
employes.
for
all wages
Credit
paid
different
process
as
expense
accounts.
charged
and
to
stock
the
in
39
COSTS
SELLING
AND
MERCHANDISE
total
for
stock room
Charge
delivered
to
timated
es-
mated
esti-
at
price.
cost
price.
cost
For
at
sales
for
Credit
amount
goods.
of returned
cost
SALES
sold
For
For
for
Charge
of
and
from
from
expense
various
the
The
handles
value
labor
each
and
delivered
made
The
balance
in
detail
and
book.
the
in
stock
otherwise
book
and
credited
shows
the value
information
is
account
to
be
how
factory
one
the value
As
7).
given
handled
considered
is
chandise
mer-
prices,the balance
of merchandise
is
of all
information
(Form
at cost
to
or
its costs.
This
stock
accounts
disposed of.
shows
account
apportioned
as
relatingto
accounts
the
permits the balance
prices.
cost
process
shows
room.
detailed
Sales
diagram
stock
charged
this account
Credit
terial
ma-
in the
on
estimated
stock
to
ACCOUNTS
of stores
remaining
is
of
various
at
room
goods
counts.
ac-
accompanying
the
of
Credit
expense
Charge for labor and
constituting expenses.
given
journal.
fr"m
EXPENSE
stock
as
ACCOUNTS
PROCESS
IN
material
labor
room,
account
of sales
amount
by sales
credits.
STOCK
stock
shown
prices.
selling expenses
cost
at
Credit
merchandise
for
Charge
in
as
on
a
the
on
the
way
net
hand
stock
which
profits
40
MANUFACTURING
FORM
COSTS
17.
SELLING
AND
insofar
they
as
and
expense
stock
of
the
difference
Of
account
at
found
is
the
expense
course,
particular factory and
to
various
the
other
accounts
in every
but
as
and
a
labor
rule
is
The
net
monthly
material
and
has
being
although
closed
monthly
the
any
the
account.
for
many
and
and
small
charged
whatever
to
do
to
necessary
this
this
be
figured by taking the
adding the proper expense,
of expense
the
to
with
do
to
house
branch
a
rious
va-
the
costs
is
branch
only
office,
the home
to
the
priceswhich,
certain
at
the
determined
be
may
selling expense,
billed to the branch
amount
illustrates how
herewith
representing actual
not
represent
are
distribution
shown
(18)
loss of
profitor
adjustment
accounts
and
on
desirable,although requiring more
more
form
lot and
a
accounts
can
charges
of
It is not
cost
a
monthly
a
accounts
work.
affected.
are
factory,as
material
are
balance
the
be
to
in
placed
in process
stock
The
the close
all
consulting
equaled by the
through the factory until
coming
is taken
then
without
is assumed
material
inventory
an
shown
41
loss accounts.
profitand
in process
value
be
can
COSTS
supposed
to
for
pay
them.
Manufacturing
the
shipping
marketing
cost
as
a
If
a
material
that
this
a
cost
Whatever
room.
article must
an
sellingexpense,
has
concern
in
certain
a
large part
price
called
on
to
their
by their
profits. Where
a
a
own
be
is
expense
added
to
further
no
goes
the
than
in
incurred
manufacturing-
in effect at least.
handles
representativewho
section
of the
transaction, and
lower
rule
a
as
country, it is evident
of the
sellingexpense
they
can
is eliminated
generally
representativethan
salesmen
salesman
sells
their
and
on
at
make
a
from
much
customer
to
a
no
sacrifice of
commission
there
is
MANUFACTURING
42
COSTS
!
li
i i *
I } I
m5f-"^z-J)twt-a."
I
II
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!
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fl
i
m
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