Millwork Cost Schedules

(Continued from Page 18) do not deserve it. So put aside your worries about the other fellow using your inside dope, if he is not a good bridge player good cards won't make him one.

So we can set this as the pixth axiom. "Give the information asked for if you have it."

It rs drfhcurc to rcconcile the -stated costs of difierent mills to the same basis. It is necessary to establish clean cut divisions of costs with standard rules, explaining the elements of cost included in any designated kind of cost. For instance there are Purchase Costs, Yard Handling Costs, Cut Sto-ck Costs, Machining Costs, Bench Costs, Factory Cost, Office aed Selling Cost, Warehousing Cost, Delivery Cost, Comrnercial Cost and Total Cost. There should be no misunderstanding of these terms-it is quite impossible to compare any costs vrithout this understanding-and yet the members of our industry are not thorougllly conversant as to their meaning. Without this understnding co-sts are not comparable without the most thorough analysis and even then the results are dubious. This brings the seventh esseqtial axiom "Have an understanding on the definitions of costs befole comparing costs."

There is a difierence between a "standard cost" and a "Cost return" from the factory. Thq difterence is this: Standard Cost is the amount it should and wquld cost under efficient methods, and a "cost return" Jrorn the factg-ry is merely the history of a cost that may or may not be interesting to know. It is a manufacturer's responsibility to his industry t9 maintain an efficient plant, for the industry certainly will not suptort an incompetent member' No baseball or football team carries dead timber, each member is up on his toes and going or he geis it where the chicken got the ax. All the same millwbrk industry. This is civilization's law of fair play and may the best man wiP.

No cost which is used to charge the buyer a fair price should include the cost of incompetenc-e. If you try to do this the public will eventually turn from you to do business where their confidence will be treated with goo(-will. Answer these questions when you analyze a cost. (a) Is the workman competent. (b) Is sumcient work given him to -kpep him busy, (c) Is he equipped with the proper tools, (d) is lre hampered by congestion around him, (e) is it necessary for higr to make good the error of others, by reason of low grade lumber, poor machine work, layout mistakes or damaged goods in handling, (f) has he been given the proper incentive and gpportunity to put forth- his best efforti. (g) is his job pleas- ant so his mind is concentrateil on his task, (h) has he the proper safeguards against injury to hiq health or body, and (i) do you both know what a full day's work is and whether it is or is not done.

No cost which does not coisider these influences represents a correct value chargeable to the -customer. No customer ihould pay for avoidable inefficiency. An{ he won't in the long run. Let us accept this axiom, the eighth, "Millwork Cost Schedules must be based on efficient standard costs."

The millwork business is so diversified that the task of recording costs by products seems hopel-e_ss. One concern may merchandise without turning a wheel, the other may be manufacturers wholly without salesmen. lt is not only possible to arrive at a correct division of these class costs but it iq an obligation that must be attended to if the tangle is to be unrarleled. One of our leaders remarks quite frequently "And it makes no difierence who holds the pencil." The solution is the ninth axiom "Compute costs as and when they occur." Thus you may stop thg: processing of raw material at any given point, if the costs have bqgn applied "as and when they occur," and you may sell with a cost lncluded in your price that matches competition in selling raw material processed to any equal point. The lumberman who spoke up and said he could undersell the millman because of his low ove-rhead was fooling only himself.

Following up the principle thit costs should le compiled "as and when they occur" it be well to illustrate classifications of costs for the purpose intended. Millmen self their products from the raw material stage t6 highly polished cabinel work, and all way side points between. Furthermore the produqts might be purchased and shipped direct to the customer or purch4sed manufactured ready for re-sale. Classifications of accounts may be set up in the ledger that take care of these segregations of overheads automatically. Thus costs applied "as and when they occur" build up prices to any given point desired. The following illustratgs:

Purchase cost rough lumber. ....$100.00

Yard handling cosis inciudes:

(a) Unloading (b) loadiqg kiln cars (c) Kiln drying

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