3. Value of expenditure reports.—In addition to the two functions of cost records discussed above, re ports should also show the distribution of expendi tures. The total expenditures, while showing the manager' the probability of gain or loss, do not tell him much regarding the ways in which money has been spent, or indicate to him where he must insist upon re trenchment and improvement. He cannot find this information by a personal inspection of the details of the cost records, except as those records apply to specific parts. If, however, the cost data are care fully classified and gathered up into reports, a very clear idea of the most important tendencies in the busi ness can be secured by the manager. Classification and summarizing of cost data according to the char acter of the expenditures is hence an important fea ture of cost recording, and it must be kept in mind in the organization of the clerical machinery of the de partment. This feature of management will be more fully discussed in Chapter XVIII.
4. Sources of cost data.—The detail necessary in recording costs of production will vary with the rela tive amount of consideration given to the three general uses of cost data which have just been discussed, and also with the amount of detail involved in the job con cerned and the character of the processes used in do ing the work. Obviously, no one system is applicable to all cases, but there are a few general principles in common use which may be helpful. Referring to the last item, the character of the processes used, one can clearly see that the methods used in summarizing costs for a continuous-process factory, or for one using processes in such a manner that it is difficult to tell where one job stops and another begins, will be some what different from the production-order method, by which each job is kept distinct from all others. The discussion will, for the present, be confined to the pro duction-order method ; the process method will be con sidered later.
It will be remembered that in the production-order method all time expended is recorded originally on some form of work card (Figures 14, 15 and 16, pages 130, 132) , which identifies the work performed with the shop-order number, the part or drawing num ber, the time expended, and the workman who does the work. All material used will be reported from the storeroom by means of the requisition on which the material has been issued. Sundry expenditures which are neither labor nor material but which are charge able against specific jobs, will appear on properly ap proved vouchers. The indirect charges will be re
ported just as direct labor and material are reported, so as to be charged against the proper standing-ex pense order numbers, to allow of their total amount for any given period being ascertained.
5. Cost ledgers.—Now if the work is of such a char acter that each shop order involves only a few charges for material and labor, it is obvious that such charges, with the correct expense charge belonging with them, could be carried directly to the general-ledger account of the order concerned, and with any other charges properly relating thereto the entire transaction could be recorded in one small ledger account. On the other hand, if the job involves many operations and its con struction is to extend over a considerable period of time, such procedure would make the general ledger too bulky and would tend to obscure its true object as a summary of the business. For this reason costs of a complex character are usually collected by some form of cost ledger, the function of which is to record per manently the details of items entering into the cost of production. Summaries only of the cost ledger with out details are carried to the corresponding accounts in the general ledger.
Cost ledgers, like all other subsidiary ledgers, such as the stores ledgers and stock ledgers, are most con veniently made up in the form of a card system. The forms of ruling for such cards must, of course, be suit ed to the requirements of the business. If the number of entries for each job is not too great, a single card may suffice to carry the record of all the details of its production. A cost-finding sheet of this character is shown in Figure 21 (page 274) . It will be noted that provision is made for recording the cost in consider able detail under the three principal factors, material, labor and expense. The several operations performed upon the piece are noted, with the workman's number and his rate. The total cost also is usually noted upon the card by adding the general expense to the total factory cost as recorded.
It may be more instructive, however, to describe a typical method of recording costs where the details are beyond the capacity of a single card. It will be understood that the procedure described is a typical one only, and simply suggestive of the general methods in common use. The discussion will be confined for the present to the problem of finding total costs which was stated as the first of the uses for which costs are kept.