n. a. c. a. bu1l1lf%wjfi€¦ · weight of each product is obtained and priced at the standard mix...

7N. A. C. A. BU1L1LF%Wjfi

Vol. XIII, No. 5 November 1, 1931

I N T H R E E SECT IO N S

Section II

IN THIS ISSUE

Standard Costs in the Clay ProductsIndustry

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302

This bulletin is published semi- monthly by theNational Associa tion of Cost Accountants

1790 Broadway, New York

ST ANDARD COS T S IN T HE CL AY PRODUCT SINDUST RY

By Kenneth Barrette, Cost Accountant,

Pacific Clay Products, Los Angeles, California

Delivered before the Los Angeles Chapter of the National Associationof Cost Accountants, June 16, 1931

AT OUR Los Nietos Plant, we have recently installed a StandardCost System which is an innovation in our industry, all the

plants having heretofore used the "Process Ton" method of costrecording. This Standard Cost System has worked out verynicely and seems to have fulfilled the four major considerationswe had in mind when we made the change, namely:

I. Reduction of costs2. Control of costs to maintain these reductions3. Budgeting of operations to predetermine profits4. Prompt periodical reports containing the essential facts neces-

sary to administrative control.As a preliminary step, the general accounts were rearranged, but,

insofar as possible, account symbols and numbers were not changed.This permits the comparing of present data with previous account-ing data as well as avoiding confusion in the auditing department.

The first problem to solve was the reduction of costs. This wasaccomplished through the installation of a Group Bonus Wage Pay-ment System. This system covers all direct workers as well as apart of the indirect workers. The balance of the indirect is con-trolled through bonuses for foremen and superintendents.

The second problem, that of controlling costs, was handledthrough setting up of standard costs.

The first element in our standard cost is our raw material, orraw clays as we term them. Clays are obtained from two sources,purchases from various vendors and from mines which we oper-ate. On purchased clays the cost to us is set up as standard whileon the clays which we mine, the management establishes a pricewhich we will pay the various mines. Any profit or loss from min-ing operations is not included in our set -up. The base price perton, plus freight, plus the standard unloading and storing costgives the cost per ton for each clay. The various types of productswe manufacture require different blendings of clays. The blend-

02

November 1, 1931 N. A. C. A. Bulletin

ings, or mixes, are established and numbered. The standard costper mix is obtained by extending the products found by multiplyingthe cost per ton of each type of clay by the number of tons ofeach respective type of clay in the mix. The extensions are totaledand divided by the total number of tons, giving a cost per mix. Tothe cost per mix is then added a percentage to cover the shrinkage.This factor has been established from past experience. The burnedweight of each product is obtained and priced at the standard mixcost, thus setting up the material cost for the item.

The standard cost for clay unloading and storing is obtainedfrom past experience, adjusted to what the management feels itshould be under a system of controlled operations.

The establishing of direct labor costs is simple after bonus ratesfor operations have been set. The bonus rate extended at thestandard base rate for the department in which the work is per-formed gives the standard labor costs. This cost does not vary,as men are paid for only their earned hours, and base rates areestablished for tasks, not for men.

The departmental burden was set up in three groups: indirectlabor, controllable indirect expenses, and fixed expenses. Underthe first grouping were included the salaries of the factory clerks,foremen, superintendent, time study man, production clerk, repair-man, and sweepers. After a careful study of the duties of thesevarious indirect workers, an allocation of their salaries was madeby departments. This allocation was then set up as the standardfor the year.

Controllable expenses were then taken under consideration. Theprevious year's expenditures were broken down into their com-ponent parts, a study made of them, and a standard set. This wasnot always the amount of past cost, but was often a figure whichit was estimated should be sufficient. The expenses falling in thisclassification are oils and greases, repair materials, power, heat,light, liability insurance, and certain items of purchased service.

Schedules were prepared covering fixed expenses such as depre-ciation, taxes and insurance. Allocation of these items was on avaluation basis.

The preparation of the indirect costs was in great detail as itforms a basis for budgeting and also facilitates the periodical com-parison of actual with standard.

303

N. A. C. A. Bulletin November 1, 1931

Departmental burden is included in our standard cost on thebasis of earned man hours. It was felt that these should be intro-duced at a normal, practical capacity. This capacity was set frompast experience, adjusted to what seemed to be the best manufac-turing practice. After determining the capacity, the number ofearned man hours was computed for each department. The totaldepartmental burden divided by departmental earned hours givesthe burden rate per earned hour. This burden rate times the bonusrate for the operation gives the burden cost.

In order to correlate the detail costs an Operation and CostRecord, Chart No. i, was prepared. On this form is recorded theproduct, size, weight, mix number, operation number, descriptionof operation, department in which performed, bonus rate per too,production per hour, set -up hours, allowed set -up hours per ioo,base rate, standard cost of labor, material and burden by operations,total standard cost of labor, material and burden and total manu-facturing cost.

We do not adjust these standard costs as shown on our costrecord to reflect current operating ratios. All variations from thestandard set -up are carried to a variation account. A report ofthese variations becomes a part of the periodical data presented themanagement.

To maintain a definite control over all operations, and to corre-late the activities of all departments so as to obtain the greatestefficiency, a centralized production control was inaugurated. Thebasis for control is through manufacture of products to fit aminimum and maximum inventory condition which has been set bythe management. This minimum and maximum is adjusted totrade conditions every three months.

All instructions to operating departments emanate from the con-trol office. Each group head receives his instructions in theevening for the work which he is to perform the next day. In thepressing department each pressman receives a "Daily Bonus TimeTicket ", Chart No. 2, which states the product to be run, quantityto run, location on dry floor to place ware, what set -ups are to bemade, and the allowed bonus hours per ioo for each product. Atthe end of his run the pressman records his actual production,which is verified by an independent count by one of the clerks. Toobtain the group's earned hours, production quantities are extended

304

wO

O P E R A T I O N A N D C O S T R E C O R D H o . O F s H a 6 T a —

PA C IF IC C LA Y PRODUCTSL OS ANGE L E S , CA L I F O RNI A S HE E T N o . l

OP E R. I

H o D E S C R I P T I O N O F O P E R A T I O ND OHCD r P

A w r u m —.H O U R

A L L O W E D/Si U R 9

S E T UPE H t O O - 5

_ S T A N D A R DRA TE L A B O R

C OS TMA TR ' L I a UR D E H

1 Run on press C 1.20 8 . 33 5.00 .0500 .50 6250,240DO 1.2500

2 Turn D .20 500 .50 1250

3 Gauge D .10 1000 . 50 0625

4 Set in Kiln F 1.00 100 .75 6000

Setting Ring 4000

5 Dry Floor S 2500

6 Burn B 1 27fD 3 2500

7 Unload Kiln A 1.00 100 .45 45M 4000

8 Clean & Inspect E . 50 200 . 45 22M 2000

9 Pile in Yard E 1.00 100 .45 4500

i

4000

STANDARD TO TAL DIR EC T LA BO R COST PER 100 2. 65 00 _C O S T PER P IECE —. lZ 7 9 TOTAL MATER IA L CO ST P ER 100 3. 2 00 0

STAN DARD TO TA L BU RD E N' C OS T PER 1 0 0 _ b- 9 17 b _ _COST PER LINEAL FT —GEA— TO TA L MAN UF ACTUR ING C OST P ER 100._12_787 5

MIX No. WEIGHT_ —:56 _Note : All figures are Illustrative , not actual.

FI G UR E 1

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P A C I F I C C L A Y P R O D U C T SI I C R

PLANT NO. 6 GROUP No._

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at bonus rates to which is added any set -up hours. On the reverseside of this form the clock numbers of the men working in thegroup are listed and the hours which they worked. The total ofthese hours compared with the earned hours of the group givesgroup efficiency.

The finishing department receives its instructions through oper-ation cards, Chart No. 3. A card is prepared for each operation on

6 " S .P .D A T . M A D . 6 / 1 0 / 3 1

D . T . R . . 1 0 . 1 1 • 1 1

6 / 1 3 / 3 1

A U L . Num"15

.•u.c[ T p C o v u T l TO TA L I I u h

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FIGURE 3

each separate lot. The card shows date product is made, datefinishing operation is to be performed, location, quantity in lot,operation number, description of operation, both the quantity ofNo. 1 and spoiled ware, rate per loo pieces, pieces per hour, andspace for workman's signature as well as foreman's. The com-

307

N. A . C. A. Bulletin November 1, 1931

pleted operation cards are turned in each evening to the productionoffice where the necessary data is transferred to a "Daily BonusTime Ticket" so that the payroll department can compute thewages. In the case of lots on which repair work is required, in-structions to the group are issued on the same form as Chart No. 3,but of a different color.

The instruction for the Kiln Setters, Burners, and Drawers areprepared on one form, Chart No. 4. This form gives the kiln

K IL N NO. A SIZE OF W ARE A " "

KI LN REPORTP A C I F I C C L A Y P R O D U C T S

L O S A N G E L E S . C A L I F .

SETTING RECORD DRAW I NG RECORD

S E TT I N G

DA TE S E T A- 1.S -SIS E T BY Fr f ln kF OR E M A N' S OK

D R A W I N G D A TE

D A TE D RA W N A -22 -31D R AW N BY F r e dF O RE MA N' S OK S i f l S n

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9 / 0—4 1 /O/O

1 ,

g , - - _ _ 3 ) 0 _400 - 400 399

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PROGRESS RECORD

1 2 3 S

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F I G u R E 4

number, major s i ze of ware in kiln, scheduled sett ing date, dateset , by whom set, foreman's O.K., the sizes of ware to be set , piecesscheduled and actual pieces set . When the setters have completelyset the kiln the card is turned into the production office. The data

308


for the "Daily Bonus Time Ticket" is transferred and the reverseside of the card filled out for the Burners. Their instructions coverdoor closing, on fire, water smoking, burning off fire, cooling, andblowers, with columns in which is shown the time scheduledfor each operation, against which the burner reports the actualtime, with his signature. When kiln is completely burned andcooled the card is returned to the office. Inasmuch as burners areon a monthly salary, no payroll records are made from this card.The form is now given to the kiln drawers as their instructions tounload the kiln. The drawing record includes scheduled and ac-tual drawing date, by whom drawn and foreman's O. K. Productdrawn is reported by sizes as to quantity of No. i, INTO. 2 andchuck. These quantities are placed opposite of quantities reportedas set in kiln. When the kiln is completed the card is returned tothe production office and the payroll data compiled for the setters.This record also has two remarks columns where any informationis given which might be a help in future planning.

There are two operations, or processes, in the manufacture ofour product, the costs of which cannot be allocated to the ware ona basis of earned roan hours. It might be well, at this time, to pre-sent our method of handling these in our standard costs.

The first of these is our drying process. The costs are entirelyindirect, being composed principally of depreciation, taxes and in-surance on building and equipment, but also includes the cost ofsteam generation. A schedule of these items has been set up asstandard with which actual costs are compared. The factor whichwe use to allocate these costs to our cost record is the area eachproduct requires on the floor adjusted by the time it must remainbefore becoming dry. The adoption of this as our factor came onlyafter several other methods had been tried. To determine theportion of the scheduled drying cost which is to be carried to the"In Process Inventory" account the various items dried are ex-tended at their standard drying cost. This is totaled and becomesthe charge to the "In Process Inventory ", the variation, over orunder, being carried to the "Variation" account.

The second of these processes is the burning of the ware. Thisis carried on in intermittent down draft kilns. Costs for this de-partment include gas, fuel oil, rock salt, labor, repair materials,depreciation, taxes, insurance, and liability insurance. The com-

309


pany has in the past studied the burning problems very closely sothat it was felt that the previous years' experience could be taken asstandard. The schedules were set up on this basis. The allocationof these costs to each size of product was something of a problemthough, inasmuch as various sizes as well as fittings are burned to-gether, with all manner of combinations of these sizes also occur-ring. The method adopted was to take our previous years' records,sort the kilns as to the major product in the kiln (which governstype of burning), total the burning costs for each of the classifica-'tions, dividing this by the total pounds of ware burned in thatclassification. After doing this we selected the classification havingthe lowest cost. We then said that the major product, on whichthis classification was based, should cost no more than this, regard-less of where burned. Therefore all of this product was deductedfrom other classifications at its cost, if burned in its own grouping.This was repeated with the next higher and the next higher classi-fication until all had been adjusted. The costs thus obtained wereset up as our standard burning costs. The comparison of actualwith standard is made as follows:

A standard amount of gas to be used for each type of burn wasset on the basis of metered burnings recorded over a considerableperiod in previous years. As each kiln is burned off the standardamount of gas is allocated to it in accordance with the class of burnit is. These figures are totaled for the month and compared withthe actual cost of gas as shown by the bills we receive. The balanceof the burning expenses were prepared as a schedule. The total ofthese expenses divided by the burner hours gives us a standardburner hour cost. This burner hour which we use in the allocationof these costs is the hours the kiln is on fire, multiplied by the num-ber of burners per kiln. The variations between actual and stand-ard burner hours are recorded and extended at the burner hour ratewhich gives the burning efficiency. To determine the amount ofburning costs at standard to be charged to "In Process ", the variousitems burned are extended at their respective standard cost figures,which, when totaled, is the amount entered in the "Inventory" ac-count. Variations from this amount go to the "Variation" a scount.

The management is furnished with the following reports whichare used for administrative purposes. The first of these is a Daily

310

w

DAILY REPORTP A C I F I C C L A Y P R O D U C T S D A n lon e I J

D E P A R T M E N T S A T P L A N T N O . a 1 0 3 1

A B C D E F G H K P RIW u Avouao

3 3 1 2 1 0 1 0 1 4 4 A I n g

_10

1 6 . 0

I o n

o n

4 6

i trok I v a , n i t eo tn

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z

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Report, Chart No. 5, which compares departmentally the actual andstandard number of men, gives the departmental efficiency as wellas average for the plant, press scheduled hours against actual oper-ation, number of kilns set and drawn as well as the per cent ofloss, and shipments, both as to trucks and freight cars. Monthlyreports are rendered, giving a comparison between actual andstandard losses occurring in the drying process, and in the kilns. Areport covering variations from standard on controllable expensesis prepared which is set up to show both amount of variation andreasons for same. Departmental efficiencies are shown monthlythrough the Foremen's Bonus Chart. This chart is built up of thevarious factors over which he has control and on which is plottedthe results for the month. The foremen's charts are then consoli-dated to form the Superintendent's Chart. This chart then givesthe plant efficiency for the month.

The system as described is giving, and will give, a control overoperations which is so essential to effective management throughits concentration on exceptions rather than the display of all con-ditions.

Budgeting to predetermine profits has not been attempted yet aswe feel we should definitely prove our standards before attemptingto predict profits.

SECRETARY'S CORNERThe purpose of this section o f the Bulle tin is to provide a means of

direct communication between the Secretary and the members of theAssociation. The opinions expressed and the ideas advanced are notin any sense to be considered expressions from the Association. I a malways glad to have comments from members of the Association onany material presented. —S. C. M.

Binghamton may be a baby chapter but they have grown -up ideas. Thefact that they are just about a year o ld d id not prevent them from holdinga very successful regional conference on October 7. The program includeda luncheon meeting at noon, a plant visitation to the International BusinessMachines Company in the afternoon and a meeting a t n ight a t which Presi-dent Sanders was the principal speaker. There were delegates from Syra-cuse, Utica and Scranton. A most successful conference and a credit to the

312


organization ability of President Morris Knapp, of the Fairbanks Com-pany, and his able board.

I had planned to visit the I. B. M. plant. I have always wanted to seethem make those super -human machines that do such marvelous tricks witha lot of little cards with holes in them. As Val Collins once said, "Theywill turn out anything from a pair of shoes to a su it of clothes." I believeif you fed them a couple of slices of Swiss chese, they would probably turnout a square meal. However, we had some hard luck. W . G. Grady, ofthe Drybak Corporation, our guide and navigator, got himself tangled upin a bunch of detour s back in the hills and when we finally dropped anchor,where do you suppose we were —at the Binghamton Country Club. By astrange coincidence we happened to find four bags of clubs in the car, so weproceeded to punch a few holes in one of the most picturesque and inter-esting golf courses I have seen for a long time. The r est of the "we" con-sisted of Bernie Wolcott, Past President Collins, of Rome, N. Y., and ourpilot. We didn't make a cent —just a tough day.

Binghamton is another one of those good little chapters, and they did afine job in their first regional conference. Incidentally business conditionsin Binghamton are better than average, the shoe factories are all busy andthere is a spirit of optimism in the a ir . That 's probably why they a re sucha grand little chapter.

The following night I put in a very pleasant evening a t the first Ladies'Night of the Worcester Chapter. Bob Service was Master of Ceremoniesand he and President George Simmons put on a fine enterta inment, favorsfor the ladies, including your Secretary, movies, and one of the mostinteresting exploration talks I have ever listened to, by Dr. W . ElmerEkblaw, of Clark University, who spent four years in the Arctic as geolo-gist and botanist of the Crocker Land Expedition under the leadershipof Donald B. MacMillan. A very successful affa ir. By the way, our oldfriend, Frank Tupper, is around again and beli eve it or not, he is still ableto ride and does. That 's what I call courage.

Well, boys and girls, here I am trying to write with charts in my eyes.For the past fou r or five days I have ben circulating in the vicinity of AlCapone's home grounds with Edmond S. (Joe Budget) LaRose of Rochesterand vicinity and I have a bad case of budgetitis in both ears. The going hasbeen pretty strenuous but we have had some grand meetings and haveenjoyed some splendid western hospitality.

It happened more or less like this. I left New York Monday and Edjoined me at Rochester. Greg Lyons, president, Harry Lang, past president,about a dozen of the Rochester Chapter officers, and Mrs. LaRose, who bythi s t ime ou ght to ra nk as a chapter officer as a reward for l istening to Edand his friends talk N. A. C. A. for five or six years, were at the stationto welcome me and wish us both good luck on the first western invasionof the year. I got a great k ick out of that.

313


When we hit Chicago we were honored by another reception committeeand the boys did everything they could to provide for our safety and com-fort until we left for Rockford, where we had our first meeting Tuesdaynight. And what a meeting 1 This was my fir st vi sit t o Rockford since thechapter was organized and judging from what I saw, I ought to practicemore of this remote control. A grand little chapter — splendid personnel, awell organized board operating under the able leadership of A. G. Block,of the Barnes Drill Company. I wouldn't be surprised if the winner of theStevenson Trophy this year found it necessary to beat Rockford. Ed a ndhis charts (the ones used at Pittsburgh) went over big. As a matterof fact all three meetings were record breakers both from the standpointof attendance and enthusiasm. None of them wound up until after eleveno'clock. It was finally twelve thirty when we got through at Rockford. Iattended a board meeting after the chapter meeting and when that wasover the gang were stil l clustered around Ed and his charts.

And here's a sample of western hospitality. I don't know any threetowns that are closer together and fur ther apart than Rockford, Milwaukeeand Chicago. They are only about eighty -five miles apart but try to getfrom one to the other in a hurry. The only way we could get to Mil-waukee for a board meeting at noon Wednesday was to catch a train at7:00 A. M. for Chicago and make a close connection there for Milwaukee.When "Pete" Floden, general manager of the Nelson Knitting Company,heard us putting in a six o'clock call he immediately suggested that hewould drive us to Milwaukee in the morning, and was that music to ourears and did that extra couple of hours' sleep help? Of course we shouldhave said no, but we didn't. However, it turned out that Jack Conley,national director from Milwaukee, was a classmate of "Pete 's" at Michiganand they ha d a r eu nion and a round of golf a fter the boa rd meeting, whicheased our consciences a bit.

By the way, "Pete" Floden is one of those mana gers who a re help ing usout of our present difficulties by the intelligent development of new prod-ucts. His company has been making cotton work socks for eighty -fiveyears or more on ma chines which were bu ilt in the plant when it was firststarted. That would not seem to offer much opportunity for the developmentof new products. But looking around for something to fill in the gapsin distribution, he hi t on the idea of making short socks for sport wear —the kind you wear under or over your golf hose. Each pair is wrappedin cellophane. The demand was immediate. I have forgotten how manythousands of dozens have been sold but it was an astonishing figure, andthere is one plant riding through the depression without distress signals.

W e must move along. A fine board meeting in Milwaukee, where ourold friend, H. G . McLean, is now president. They are coming a long in fineshape this year. I was especially impressed with the progress which hasbeen made in team organization under A. D. Lawrie, Milwaukee Lace PaperCompany. A little golf in the afternoon —very little by the Secretary andthat very lit t le very bad. A record - breaking chapter meeting at night. They

314


have a fine meeting place in the Milwaukee Athletic Club, a perfect layout.After the meeting Lar ry Regner and some of the boys undertook to proveto me that Milwaukee is still famous. I'l l admit it.

Then another six o'clock call in order to get back to Chicago, wherethe boys had arranged a little workout at Olympia Fields, where we heldour tournament the yea r we held our convention in Chicago. It is a greatplace, four eighteen -hole courses and eight hundred caddies. Of coursethey would pick the toughest course but even a t that Jack Cooke and Ha r ryMcCluskey insisted on contributing to the trust fund which I am buildingup from my golf earnings as a protection against rapidly approaching old.age. I started eighteen years ago and I now have four dollars and seven-teen cents net. The seventeen cents is due to settling a two -bit bet witha Scotch cost accountant.

This man McCluskey must be quit e a golfer when he is in condition. H eis a little under weight at the moment. They have two pairs of scalesin the clubhouse a t Olympia Fields and by parking one -half of him on eachpai r we ma na ged to get a n approxima te tonnage of about two hu ndred a ndsixty pounds. When he hit s them they go r ight away from here, but where?One hole was bordered by a swale dotted with small islands. Ha r ryelected to play this hole from island to island and put on one of the mostimpressive exhibitions of lily pad golf I have ever seen. Every time I seeone of those wild li fe in Africa movies I 'l l th ink a bout that ga me a t O lym-pia Fields. Professor W . Mason Smith and President Ed. Kru ger wereamong those present. The Professor apparently has been employing hisacademic leisure to improve his golf but I doubt if anything short of asabbatical year will really meet the needs of the situation. On the wayout we saw some of the new World's Fair bui ldings. They are modernisticin design, and I mean modernistic. They will be modern a hundred yearsfrom now. I 'd hate to have to walk home past those buildings after aheavy night.

Then back for a board meeting at four o'clock and another record -breaking chapter meeting that night. There are a number of new faces inthe Chicago Board, including Professor W. Mason Smith, who, as localdirector in charge of membership, is now practising the theories he usedto expound at National Headquarters, and under the leadership of Ed.Kruger they are making some real substantial progress. I think Chicagois headed for i ts place in the sun. One valuable factor is the interest of thepast presidents. There were three at the meeting and W. H . Osborne, lastyear 's president, is in charge of Stevenson Trophy points. H e ha s a largechart showing in colors this year's performance as compared with lastyear 's budget. This chart is displayed and explained at each chaptermeeting.

One significant comment on the interest which these meetings arousedwas the fact that in Chicago several men who had been present a t Rockfordand Milwaukee came back for an encore. H e knows his stuff, this Joe

315


Budget, whether it is budget procedure or chapter operation. Thi s wa s myfir st t r ip wi th h im a nd I hope he enjoyed it a s mu ch a s I did.

S. C. M.

Books Received

AMERICAN BUSINESS PRACTICE. (4 Volumes.) James C. Egbert, Elmer A.Holbrook, Morton A. Aldrich, Editors. Ronald Press Company, New

York, N. Y . 1931. Price $14.00.INTRODUCTION To ACCOUNTING. Dallas S. Bolon and George W. Eckelberry.

John Wiley & Sons, Inc., New York, N. Y. 1931. pp. 572. Price $4.00.

Notes on Current Literature

1930 MERCIiANDISING AND OPERATING RESULTS FOR DEPART-MENT STORES AND SPECIALTY STORES," by H. I. Kleinhaus. Con-trollers' Congress, National Retail Dry Goods Association, NewYork. 33 PP. Price, $5.00.

T he work of compiling data on merchandising and operation statisticsdepartmentally has been carried on annually for the past six years by theControllers' Congress. They aim to furnish to the cooperating stores themedian performance figures by means of which each store may check itsown operations. The study this year is expanded somewhat to give morethan the median figures so that those stores which have better than medianperformance will have an additional method of guiding and comparing theiroperations with those of other stores in the same group. The study for themost part is presented in a series of tables which give the vita l statistics onvarious lines of goods and departments classified as to merchandising sta-tistics and operating expense statistics, mostly related to the sales dollaron a percentage basis. The study is sought eagerly by men in the depart-ment and specialty store business and represents a worth while contributionto statistical factual data in this field.

"DEPARTMENT STORE ACCOUNTING," by DeWitt C. Eggleston.Published by Greenberg, 16o Fifth Ave., New York. 409 pp.1931• Price, $7.50.The author, from his wide experience in public accounting practice, has

developed this volume to cover the best in accounting practice as applied to

316

N o v e m b e r 1, 1931 N. A. C. A. Bulletin

the department store field. His approach to the problem is through themerchandise budget and expense budget and following two introductorychapters on these two phases of operations, he goes directly into the properroutine necessary and accounting procedure involved in adequate accountingpractice. From Chapter II I , starting with "Purchasing Systems" throughChapter XLI I on "Expense Apportionment," the whole volume is dedi-cated to a deta iled application of accounting matters to the department storefield. The closing chapters on department and financia l statements and sta te-ment analysis are a good summary of the materia l.

"MONTHLY AND YEARLY STANDARDS OF PERFORMANCE FOR DE-PARTMENT STORES: 1930," by E d g a r H . G a u l t , U n i v e r s i t y ofMi c h i g a n , B u r e a u of B u s i n e s s R e s e a r c h , 1931. 136 pp. P r i c e ,

$I.00.For several years the Bureau of Business Research of the School of

Business Administration of the University of Michigan has been doingsome excellent work in measuring the results of department store operations.This volume is one of a series dealing intensively with the statistics gath-ered from this field. It is based on data secured by the Bureau from 33department stores that are in continual contact with the Bureau on coopera-tive research projects. These stores are located in States north of theOhio River between Iowa and Maine and operate in cities ranging inpopulation from 40,000 to 120,000. Each of the stores is either the leadingstore or among the leading stores in its city. Their annual sales volumesrange from $500,000 to $3,000,000, with most of the stores reporting avolume of approximately $1,000,000. The study includes standard figuresfor the monthly as well as yearly performance for each of 43 departmentsand for the store as a whole and the present volume is so constructed thatthese standard ratios are directly comparable with the standards publishedby the Bureau in previous studies.

The volume should be of considerable interest generally and particularlyto those accountants who are confronted with establishing proper measuresfor operating performance in the department store field.

"SYMPTOMS OF INDUSTRIAL FAILURES - 1920 - 1929." PAUL J.FITZPATRICK. P u b l i s h e d b y th e Ca th ol i c U n i v e r s i t y of A m e r -

Ica, 1931• 1 3 2 p p .

This l i tt le volume is a copy of Professor Fitzpatrick 's dissertation for hisdegree of Doctor of Philosophy at the Catholic University of America . H ehas used as his basic data the financial sta tements of some 20 companiesthat failed during the period 1920 to 1929. In each case he has examinedthese sta tements and applied the more or less conventional ratio analysisapproach to them for a period of from three to five years prior to thefailure to indicate what trends could be discovered by a study of these

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published data. In his concluding chapter he takes an overall view of thefailure situation and points out the industrial ailments that have been broughtto light in his study. These number some 18 specific things that were wrongwith one or more of the businesses that passed under his microscope. Inhis conclusion, he minutely examines the trend of the various ratios thathe has used as shown by a study of the everal companies. He concludesfurther, in the order of their importance, that the best indicators to beapplied to financial statements are (1) Net Profits to Net Worth, (2) NetWorth to Fixed Assets, (3) Net Worth to Debt, (4) Quick Ratio or theQuick Assets to Current Liabilities.

Naturally, the author of such a study is limited in the basic data at hiscommand, largely because of lack of standardization in accounting terminol-ogy and use of the various terms by different companies, also by the meagernature of the data that is presented. However, the author seems to havemade an exhaustive study of such data as he could get for the purposeand for those accountants, lawyers or bankers who are interested in state-ment analysis primarily, the study should have a considerable amount ofpractical value.

Notes

The American Bottlers of Carbonated Beverages, 726 Bond Building,Washington, D. C., in their Bulletin No. 7 outline two Bottlers DeliveryCost Systems. These have been presented to aid the average bottler toobtain a better knowledge of what it costs him to deliver his goods, andhow his present system may be made more efficient and economical throughthe use of cost records. Inquiries relative to this bulletin should be sentto the address given above.

The Department of Manufacture of the Chamber of Commerce of theUnited States, Washington, D. C., has issued a series of bulletins in theinterests of promoting the application of sound accounting methods to busi-ness problems. "Cost Finding for Marketing Functions" is the title ofBulletin No. 45, which contains the following concluding paragraph: "Inconclusion, it may be said that many marketing problems can be approachedfrom a cost point of view. Based upon thorough analyses of marketingcosts, marketing policies, whether for individual companies or for entireindustries, can be planned more effectively. In distribution, as in manu-facturing, elimination of inefficiencies, and disclosure of preventable losses,lead the way to cost reduction and to greater profits." Copies of this bulletinmay be secured by writing to the address given above.

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Employment

Men AvailableThe following members of the Association are available for em-

ployment:No. 1257 —Cost and general accountant capable of taking full charge of

accounting and handling Income Tax ma tters. Eight years' public account-ing experience. Has installed more than fifty cost and general accountingsystems for retail and manufacturing businesses. Salary open, location im-material and available at once. American, Protestant. Married.

No. 1258— Corporation Executive at present and for the past six years,employed by large nationally known manufacturer and affiliated companies,,in the capacity of Comptroller and Assistant Treasurer, seeks new con-nection offering a wider scope for his capacities. Sixteen years of diversi-fied experience in standard costs, operating and financial budgets, systeminstallation, inventory control, credits, collections, federal and state taxes,insurance, corporation auditing and accounting, and executive work withconsolidated corporations. American, Protestant. Age 36, married, welleducated, and in excellent health. Location, Eastern United States. Salary,open.

No. 1259— Accountant and Engineer, age 36, with eighteen years' back-ground in Distribution, Production and Control work, would like to contact

1with business firm for services in connection with installing Cost System,JBudgetary Control, Wa ge Plans, Production Planning or MerchandisingMethods. Salary and location open.

No. 1 2 6 0 --C .P .A. (A. I . of A. Examination) desires connection with apublic accounting, commercial, or industrial concern. Is thirty -two yearsold, university graduate and has had six years' pu blic and four yea rs' com-mercial accounting experience. Will go to any part of country. Highestreferences. Available immediately. Salary open.

No. 1261 — Executive, age 32, married, twelve years' practical machineshop experience as machinist and toolmaker. Night High School and Uni-versity graduate. Three years public accounting. Two years in presentposition as Chief Accountant and assistant to both the General and Pro-duction Managers of a nationally k nown machine tool manufacturer. Wi thassistance of an Industria l Engineer insta lled and personally perfected pres-ent cost system. Familiar with the presentation and analyzation of financia lreports and graphic charts.

No. 1262 — Comptroller, Cost Executive — twenty -two years' experience inmanufacturing and general accounting. Fifteen years supervisor of cost,inventory control, payrolls and office management. Two years comptroller

.in charge of all accounting activities, financial reports, tax matters, and

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systems installation. Married. Age 40. Location preferably in the East.Salary open.

No. 1263 — Capable accountant or financial executive, thoroughly experi-enced in the handling of corporation finance and accounting. Has had variedexperience in reorganizations, system, statistics, budgetary control and audit-ing work in the Public Accounting field and several years as office manager,accountant and Secretary- Treasurer of a large manufacturing company. Col-lege education, fluent Spanish, age 32. Protestant, married. Salary sec-ondary to opportunity for future advancement.

No. 1264 -- Corporation executive as Treasurer, Comptroller or Assistantnow available. Thoroughly familiar with Standard Costs, budgeting and man-agement. Has recently been associated with the textile industry in the manu-facture of silk, rayon and cotton fabrics. Five years of public accounting ex-perience covering auditing, system installations and tax work in many fieldswith a nationally known firm of public accountants. New England or border-ing states location is preferable. Salary open. Age 34. Available immediately.

No. 1265 — Comptroller —Chain Store Executive —eight years' experienceas Public Accountant covering general audits, systematizing, cost installationand special investigations. Twelve years' experience as Comptroller of largenationally known Chain Store Organization. Age 38, good health and habits.No particular preference as to location. Salary open. Future opportunitiesin position prime consideration. Available at once.

Applications f or Membership

The Execut ive Committee has ruled that the names and addresses of all applicantsfor membership in the Association shall be published in the Bulletins for two weeksin advance of the date on which they are sent to the Director -in- Charge of Member-ship for approval. The following applications will be forwarded to the Director twoweeks from the date of this Bulletin. Comments in regard to these applications whichate received from members of the Association during this two weeks' period will beattached to the application before they are forwarded to the Director -in- Charge.

AtlantaTrounstine, Lewis J., Jr., Fulton Bag & Cotton Mills, Atlanta, Ga.

BostonGoodman, J. Henry, L. H. Hamel Lea., 117 Essex St., Haverhill, Mass.Lutz, F. Arthur, 8/ Perry St., Cambridge, Mass.Shaw, Charles K., Jr., Bentley School, 921 Boylston St., Boston, Mass.

BridgeportHoyt, Fred F., Petroleum Heat & Power Co., Stamford, Conn.

BuffaloThompson, Ray E., Justiss Aero & Motor Co., Buffalo, New York.

ChicagoJenkins, Lewis Vallette, Jefferson Electric Co., 1501 W. 15th St., Chi-

cago, Ill.

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CincinnatiTyirin, William C., Lybrand, Ross Bros. & Montgomery, 3 W. Fourth

St., Cincinnati, O.

ClevelandCowan, T. F., the Corrigan, McKinney Steel Co., P. O. Box 678, Cleve-

land, O.Wood, George S., Corrigan, McKinney Steel Co., Cleveland, Ohio.

ColumbusDonley, Eugene W., Moores & Ross, Inc., Columbus, Ohio.Hoertel, George W., Wariddell Co., Bucyrus, Ohio.

DaytonBreaden, Earl Carroll, International Scale Co., 448 Huffman Ave., Day-

ton, Ohio.Haben, W. M., Norwood Engineering Co., 8 Norwood Ave., Dayton, O.

DetroitDebaun Harold, Unwasal Credit Co., 1164 Penobscot Bldg., Detroit,

Mich.Johnson, Irving H., U.S. Rubber Co., 6600 E. Jefferson Ave., Detroit,

Mich.White, Paul E., Ternstedt Mfg. Co., 6307 West Fort St., Detroit, Mich.

ErieJablonski, Stanley, Francis, 317 W. 9th St., Erie, Pa.

MilwaukeeBlake, Edward L., National Cash Register Co., 214 W. Michigan St.,

Milwaukee, Wisc.

MinneapolisStephenson, Henry C., Red Owl Stores, Inc., 617 Washington, N., Min-

neapolis, Minn.

New YorkDick, Ralph H., Barrington Associates, Inc., 220 East 42d St., N. Y.,

N. Y.Harding, Frank E., Jr., Bakelite Corporation, 247 Park Ave., N. Y.,

N. Y.Houdek, Gustav, Binney & Smith Co., 41 E. 42d St., N. Y., N. Y.Kammer, Edwin J., Henry Klein & Co., Inc., 74th St., Elmhurst, L. I.Von Irgens- Bergh, H.C.F., Int. Combustion Eng. Corp., 200 Madison

Ave., N. Y., N. Y.

PhiladelphiaTutchings, Harry W., Philadelphia & Reading Coal & Iron Co., Read-

ing Terminal, Philadelphia, Pa.

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Pi t t sb u r gh

Hartman, Alexander I . , 1607 Sarah St., Pittsburgh, Pa.

Reading

Weyandt, Luther John, Reading Pra tt & Cady Co., Tupehocken St.,Reading, Pa.

Ro ch es te r

Hoit, Gordon G., Stromberg Carlson, 100 Carlson Road, Rochester, N. Y.

Scr a nt on

Vastine, Wm. M., the Pittston Co., Scranton, Pa.

Wo r c e s t e r

Rose, Albert E., O. & J. Labeling Mach., 60 Ellsworth St., Worcester,Mass.

Outside of Chapter Territory

Ayers, Al fr ed H., the Colorado Fuel and Iron Co., P . O . Box 1920,Denver, Colo.

Law, Channing E., the Colorado Fuel & Iron Co., P . O . Box 1920,Denver, Colo.

Wessma n, Roy E., Colorado Fuel & Iron Co., Continental Oil Building,Denver, Colo.

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STATE MENT OF T HE OW N ER S HI P , MANAGEMENT, CIRCULATION, ETC.,REQUIRED BY T HE AC T OF CONGRESS OF AUGUST 24, 1912,

Of N. A. C. A. Bulletin, published semi - monthly at New York, N. Y., for Oct. 1, 1931.State of New York, County of New York, ss.

Before me, a Notary Public in and for the State and county aforesaid, personallyappeared T. M. Dickerson, who, having been duly sworn according to law, deposes andsays that be is the Editor of the N. A. C. A. Bulletin and that the following, is, tothe best of his knowledge and belief, a true statement of the ownership, management (andif a daily paper, the circulation), etc., of the aforesaid publication for the [late shownin the above caption, required by the Act of August 24, 1912, embodied in section 411,Postal Laws and Regulations, printed on the reverse of this form, to wit.

1. That the names and addresses of the publ isher, editor, managing editor, and businessmanagers are : Publisher, National Association of Cost Accountants, 1790 Broadway,New York, N. Y. Editor, T . M. Dickerson, 1790 Broadway, New York, N. Y. ManagingEditor, none. Business Manager, S. C. McLeod, 1790 Broadway, New York, N. Y.

2. That the owner is: (If owned by a corporation, its name and address must bestated and also immediately thereunder the names and addresses of stockholders owningor holding one per cent or more of total amount of stock. If not owned by a corpora-tion, the names and addresses of the individual owners must be given. If owned by afirm, company, or other unincorporated concern, the name and address as well as those ofeach individual member, must be given.) National Association of Cost Accountants,1790 Broadway, N. Y. President, T. H. Sanders, Harvard School of Business Adminis-tration, Cambridge, Mass. Secre tary, S. C. McLeod, 1790 Broadway„ N. Y. Treasurer,W. O. Cutter, 1790 Broadway, New York, N. Y.

3. That the known bondholders, mortgagees, and other security holders owning orholding 1 per cent or more of total amount of bonds, mortgages, or other securities are :(If there are none, so state.) None.

4. That the two paragraphs next above, giving the names of the owners, stockholders,and security holders, if any, contain not only the list of stockholders and securityholders as they appear upon the books of the company but also, in cases where thestockholder or security holder appears upon the books of the company as trustee or inany other fiduciary relation, the name of the person or corporation for whom suchtrustee is acting, is given; also that the said two paragraphs contain statements embracingaffiant's full knowledge and belief as to the circumstances and conditions under whichstockholders and security holders who do not appear upon the books of the companyas trustees, bold stock and securities in a capaci ty other than that of a bona fide owner,and this affiant has no reason to be lieve that any other person, association, or corporationhas any interest direct or indirect in the said stock, bonds, or other securt ies than as sostated by him.

5. That the average number of copies of each issue of this publication sold or dis-tributed, through the mails or otherwise, to paid subscribers during the six monthsprece di ng the dat e s hown above i s . . . . . . . . . . . . (This information is required from dailypublications only.)

T . M. DICKERSON,Editor.

Sworn to and subscribed before me this 15 day of Oct., 1931.( S E A L ) W. P. SAD TLER , JR .,

Notary Public,New York County Clerk's No. 10,

New York County Register's No. 2.9.100.Commission expires March 30, 1932.

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n. a. c. a. bu1l1lf%wjfi€¦ · weight of each product is obtained and priced at the standard mix...

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