6. Labor and material cards.—When a production order is plaCed in the shop an account is opened in the cost ledger by placing in its files the necessary cards properly filled out. These will consist gener ally of a labor-cost card and a material-summary card. The work cards (Figure 14, 15 and 16, pages 130, 132), are collected daily and, after being approved by the proper foreman, are forwarded to the cost depart ment. Here they are first sorted according to work men's numbers, that is, all the cards sent in by any one workman are grouped together. It will be noted that, in best practice, each workman will send in, daily, a separate work card recording the time he has worked on each and every job, whether he has finished the job or not. The difficulty of separating different labor items placed upon the same work card will be apparent. The wages represented by each card are now computed and noted thereon. This may be based upon day-pay, piecework or premium-plan methods, but in every case the wage so recorded is the labor cost chargeable against the job, so far as that particular work card is concerned. If the expense is distributed by machine rate, or if different percentage rates are used for different departments of the fac tory, the expense belonging to each work card should also be computed at this time and noted upon the card. If a fixed percentage is used for all work alike, it is generally more convenient to defer the computation of the burden until later.
The total time recorded by each man can then be checked against the time-clock or the checkboard rec ord to insure that all elapsed time recorded by these records is accounted for. The daily payroll may now be made out. If all men are on day pay an independ ent payroll may be made out, based upon the clock or the checkboard record; this must check against the costs as shown by the work cards. If, however, piece rates or a bonus system be in use, the payroll should be based upon the work cards, tho, even then, the elapsed time must check against the clock record.
7. Labor-cost sheet.—The work cards are then sorted by production orders, that is, all cards bearing the same production-order number are brought to gether. The items referring to each production order are then posted on a labor-cost sheet, as shown in Fig ure 22 (page 276) , a separate sheet being made out for each production order so that the total labor cost of the order concerned can be summarized at any time. In cases where the labor charges are few, they could, of course, be posted directly to a cost-summary card, such as is illustrated in Figure 21 (page 274) . The detail in which the labor cost may be recorded on the labor-cost card must, of course, vary with conditions. It may be a simple running memorandum, a sum many of which will give only the total labor cost of all operations, or it may be arranged so as to give the to tal labor cost by operations, as illustrated in Figure 20 (page 233), where similar operations may be totaled.
Either the amount of each work card may be recorded, or the cards may be recorded in groups, as conditions dictate. In so far as securing total labor costs is con cerned, the work cards are no longer necessary after they are posted on the labor sheet. Their further use in securing statistical costs will be discussed later.
8. Material-cost sheet.—The material requisitions, after being properly evaluated either by the store keeper or in the cost department may, if their number is small, be filed with the labor-cost sheet. If, how ever, there are many material entries they may be posted on a material-cost sheet in the same way that labor charges are carried on the labor-cost sheet. For the ascertainment of total charges the material requisi tions have then fulfilled their service, but like the work cards they are still useful for statistical purposes.
The costs of indirect labor and material are gath ered in the same manner as in the case of the direct costs—the detail costs, as they come in on work cards, and the material requisitions being carried to the proper expense account. The total of these expense accounts must be compared periodically with those of preceding periods, to insure that the factors used in their distribution are accurate.
9. Cost-summary sheet.—From the labor-cost sheet and the material-cost sheet the total prime cost to date may be summarized at any time. When the job in question is finished, the summaries of both of these sheets are carried to a cost-summary sheet. If only one article is involved and all labor and material items are carried to a cost-ledger card, as shown in Figure 21 (page 274), the summary may be made directly upon it. To the prime cost, so summarized, is added the expense, if it is distributed by a percentage method; or the proper proportion of the supplemen tary expense is added if the machine-rate method of distribution is in use. If there are any sundry charges that are chargeable directly to the production order, as shop expense, these are also added; in this way the factory cost is completed. To the factory cost is added the proper percentage for general ex pense and selling expense, and thus the total cost of the article is obtained.
10. Grand cost any particular job consists of many parts, and production orders have been issued for each part, so as to segregate its cost, a grand summary of all cost-summary sheets for the entire job must be made, as shown in Figure 23 (page 278), which illustrates clearly the summarizing of the costs for a direct-acting steam pump. The figures given are hypothetical and taken somewhat at ran dom. The need of such methods will be made more apparent by a consideration, for example, of the costs of a large multiple-cylinder marine engine, where it is desired to obtain the individual costs of the several parts, or group of parts, which make up the engine.