3. Graphic cost data.—The values shown in Figure 29 (page 324) , have been assumed at random, but they are probable values. The usefulness of express ing standardized cost data in this form will be evident when costs are to be predicted. If laid off on sheets of large size such graphs will save much computation where varying numbers of pieces are to be produced from time to time; they will also serve to indicate quickly the minimum number of pieces that can be eco nomically produced.
The principle involved is also of very great impor tance to the small manufacturer who is making parts which require considerable preparation. The decided saving in unit cost that follows from making even a small number of parts at one time, where preparation is a factor, is not, in general, well understood; yet careful planning in advance would often make such savings possible.
4. Control of will appear from the discussion in Chapter X that the methods of cost control and cost prediction, as applied to material and labor values, as previously discussed, are not appli cable to expense, or burden. It is not possible, under any known system, to predetermine with accuracy each item of expense material and labor that will be needed for a given piece of production, since, as has been ex plained, many of these items are not directly con nected with the given piece; in fact the connection may be very remote.
The totals of these expenditures can, however, be closely controlled by properly arranged cost reports, as has been explained in Chapter XVIII. A very ef fective way of doing this is to set limits to the amount that each foreman may spend, in a given period of time, for each class of expense. Weekly or monthly statements should be issued from the cost department, in order that the attention of each official may be peri odically called to the important question of how his budget stands. Much of the excess and variation in expense outlay is due to wastefulness, and it is sur prising how quickly and effectively a budget system of this kind will remedy some of these wastes. Care should of course be taken that the budget is made up on correct data so that the work of production may not suffer. There is no economy in reducing the amount of oil to the point where bearings will suffer, or in reducing the amount of waste to be used to the point where machines will be untidy. In general, however, a budget system will reveal an excessive use of expense material and labor, and will decidedly tend to check wastes and keep constant the relation be tween direct production and expense.
Since all the methods of distributing expense estab lish a relation between expense and some feature of material or labor, a close approximation of the expense necessary for a given piece of production can usually be made when this basic factor is known. This rela tion can be used with some assurance if expense totals are controlled in such a way as has been indicated. But this approximation cannot be compared in ac curacy with those methods of predetermining labor values that have been treated up to this point.
5. Conclusions.—The treatment of the subject up to this point will have made it clear that no one method of cost finding can be laid down that will answer the requirements of every situation. Each case must be studied independently and a system selected that will be applicable to the problem at hand. The discussion in the previous chapters is based, for the most part, on the problem of cost finding in manufacturing plants, for the reason that it is in these plants that the problem is most complex and most perplexing. The general principles discussed hold true, however, for all cost-finding methods, tho the exact manner of their application necessarily differs with circum stances.
It is of prime importance, therefore, that the execu tive, in installing a cost-finding system, or in opera ting one already installed, should have a clear idea of just what results are desirable. A cost-finding system should be planned in advance as much as, if not more than, any other part of the factory system. It should obtain just the results wished, and it should not gather a lot of useless data. Such a system can fail because of too much detail, as easily as it can fail because of lack of results. It is of importance, also, that the re sults obtained be made use of, for cost data which are not used represent wasted money. It requires a man with knowledge, intelligence and judgment, well in formed in the details of the business, to plan and oper ate successfully a cost-finding system, if the problem is at all complex.
The introduction of a cost-finding system is often difficult. This is true partly because the human ele ment enters largely into the success or failure of nearly all so-called "systems." Workmen are not generally interested in cost-finding methods, foremen are often antagonistic, and even the superintendent may be at least apathetic. It often takes considerable time and persistence to put a cost-finding system into suc cessful operation; and it nearly always requires the firm support of the managing executive to maintain it. When, however, the executive has once developed a cost-finding system which presents to him the com plete costs of his units of production; which shows him in intelligent detail where the money has gone, whether for direct or indirect production; which shows him the relative values of different methods; and which enables him to check inefficiency in process or employe—when the executive has perfected such a system, he has obtained the best possible safeguard against failure, and a guide to future operations which must be used to be appreciated. The need of a cost finding system of some sort is so basic that it is marvelous indeed that any man should think of oper ating a factory without one; and, without doubt, wherever competition is a factor, a cost-finding sys tem will be the corner-stone of the factory of the future.