Excerpt from Fundamentals of a Cost System for Manufacturers, July 1, 1916
It is a fact too little realized that an accurate determination of costs is fundamentally related to manufacturing efficiency. More and more concerns are joining the ranks of those who realize the necessity of knowing accurately their costs of manufacturing and selling. Every business man who joins in this work can feel that he is doing his part toward the improvement of business conditions generally and his own business conditions in particular. This bulletin has been prepared with a view to aiding the campaign of education by explaining what a cost system is, how it operates, the results obtained, and the benefits to be derived from its operation.
Objections to Installing Cost Systems.
There are a number of objections in the minds of business men who have not installed cost systems to taking the matter up. One of these is the feeling that exists in the minds of so many that their business is unique and different from any other and that no system could be devised which would give them true costs. It is unquestionably true that some lines of manufacture lend themselves more readily to the installation of a cost system than others, but it is also true that no line of manufacture is so complicated that a system can not be devised which will give reasonably accurate results.
The most common objection is that of the cost of installation and the expense of operation. Many manufacturers are of the opinion that a cost system means an interminable amount of detail and red tape and the assistance of a number of extra clerks. It is true, in many cases, that some extra labor may be required, but not to the extent that the manufacturer fears. There is in nearly every office that is not systematized sufficient unnecessary work done to cut the extra work down to a minimum, and, in fact, in some cases, where an office has been systematized, it has not been necessary to employ any extra help at all. If the manufacturer will look upon a cost system as an investment which he expects to produce for him a fair return in the same manner that an investment in improved machinery would, the objection as to the expense is not a valid one. A number of business men think that money spent for stationery is wasted and that a cheap ready-made book will answer as well as one specially designed for his business.
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