15. Finished-stock record.—Just as it is necessary to have accurate records of raw materials and finished parts, so it is necessary to have accurate records of all stock. Such records not only guide in placing pro duction orders, but, if properly studied, they will pre vent the accumulation of obsolete stock. Records of this kind are usually kept on loose-leaf ledgers such as are illustrated in Figure 11 (page 106). A leaf devoted to each item of stock shows all receipts from the factory, all shipments and the balance on hand. The dates of all receipts and all shipments are also recorded. This is important for two reasons : first, to show the rate of shipment so as to gauge the de sired rate of production; and second, to serve as an aid in judging depreciated values when inventory is taken. This last is highly important in a business which is developing rapidly. Thus, a few years ago electrical apparatus held in stock became obsolete in a short time because of the progress of the art. As this obsolescence occurs in the case of most manufac tured goods, the stock record is of great value in guarding against such loss.
The stock record gives the location of the appa ratus which it records, the maximum and the mini mum amount to be carried, and also a column for its evaluation. The stores ledger, the active accounts in the cost ledger, and the stock ledger already discussed, constitute a continuous inventory, and from them can be obtained at any time the value of all material grouped in the three important stages of fabrication, namely, as raw material, material in process and finished product.
16. Material wastes. —A most important feature of the care and accounting of materials is the matter of waste. Every factory has its own peculiar sources of waste. These should be carefully located and their effect minimized as far as possible. Wastes are of two general kinds; they may be classified as avoidable and unavoidable wastes. Those due to carelessness in handling or overissuing material are what may be called avoidable wastes, as are also losses by pilfering, or from the diverting of material from the factory in any way without compensation. A well-kept stores ledger and a careful periodical checking up of ma terial on hand will minimize losses of this kind. If more material is issued than is actually needed for the work in hand serious loss is sure to occur. Material
left over from productive work is not likely to be re turned to stores unless a special effort is made to bring this about. Ordinarily it will lie around the shop in boxes and under benches, and much of it will find its way into irrecoverable scrap. Material requisitions should, therefore, be drawn with care to minimize this form of loss, and any material left over from a given job should be carefully returned to stores and credited to the work for which it was originally requisitioned.
Unavoidable wastes are such wastes as are incurred in cutting up material. Thus the waste due to cutting up copper bars, either by saw cuts or under presses, may be considerable. Even with cheaper material, as, for instance, sheet steel, where large quantities are used, the value of the scrap may be great. If the waste is in such form that it may be returned to stores and used for other purposes, the job in question may be credited with the value of the scrap incident to its production. In fact, in some cases if this procedure is not followed the material cost will be prohibitive. But in any case all scrap and waste should be care Sully noted and, if salable, it should be gathered up and stored, pending such sale. Not the least impor tant feature in the handling of material is to impress on foremen and workmen the fact that material repre sents money and should be treated accordingly.
.[t will be clear that the value of all material pur chased, as recorded in the general ledger account, may, and generally will, exceed the value of the same material as charged to production, in the cost ledger, by the amount of waste and similar losses. In some kinds of manufacturing such differences are difficult to check up ; but wherever it is possible this should be done periodically. If there are any returns from the sale c f scrap this should, of course, be taken into ac count in considering the difference between the sum maries from the two sources. A similar discrepancy may eltist between the time paid for on the payroll and the time charged by the cost system against the same piece of production. It is generally easier, however, to minimize this difference in the case of labor than it is in the case of materials.