STATISTICAL RECORDS AND REPORTS 1. Reports in general.—It was noted in the pre ceding chapters that the three principal uses of a cost system are to show the actual cost of operations, to form the basis of managerial reports, and to assist in predicting future performances. The first item has just been discussed; the second will form the basis of this chapter.
In an industrial enterprise of any considerable mag nitude it is impossible for the manager to keep under his immediate and personal control much more than the general direction of the business. He must dele gate responsibility and authority to those directly un der him, and these in turn must still further intrust responsibility and authority to those under their Three tion, and so on down the entire line of organization.
As the enterprise grows the duties of the higher of ficials come to be more and more of a supervisory na ture, and details must more and more be trusted to subordinates. But as the business grows it also be comes more difficult for those in authority to see, by personal observation alone, exactly what is taking place under them; while, at the same time, it becomes increasingly important and necessary that they have a clear conception of these matters if they are to guide the enterprise successfully. Some one has said that the secret of success in management is to organize, deputize and supervise the activities of the enterprise; and in a rough way this expresses the general prin ciples concerned. If the management cannot person ally perceive what is happening under him, he must at least organize his methods in such a way that all ten dencies and indicative results will be brought before him in a clear light.
2. Financial statements.—Since commercial suc cess is measured in money, it is natural for the man ager to look for such financial statements as will throw light on his problems, and he naturally turns to his general accounting books for any help that they may give. In so far as general results are concerned, these are helpful, and the balance sheet and profit-and-loss account, containing, as they do, a summary of what has occurred, are very helpful in problems of manage ment. But these statements are given to him only at long intervals, while his daily problems of manage ment demand up-to-date information regarding many details of the business that do not appear separately in the general statements, but which may be found in the cost system in one form or another. From what has been already said it will be evident that a manager cannot find this information himself; but if he knows the content and form of what is desired, the cost sys tem can be so arranged as to supply it automatically and periodically.
3. Value of reports.—This broader conception of cost finding as a means of measuring and controlling industrial activities is not very generally appreciated. A system of carefully selected reports is the only method by which a manager can form an intelligent estimate of the controllable and the uncontrollable factors of his business; it is also the best way by which to find the need of betterments and to direct their en forcement intelligently. The number and character of the reports which a manager may consider neces sary will differ with the industry. Moreover, they may not all be based upon the cost system. It is evi dent, however, that a cost-finding system is necessary for most of the important managerial reports of a manufacturing enterprise. The profit-and-loss state ment can usually be made up at the end of the year, or at other times when an inventory is taken, with no reference to a cost system; but if it is desired to make such a monthly statement as is illustrated in Figure 3 (page 27), it is obvious that some regular method must be employed to evaluate the cost of such items as material, work in process and finished product.
4. Departmental and other reports.—Aside, then, from the question of financial reports that grow naturally out of the general accounting, it may be good policy to call for special reports from depart ments, or such other activities as will best serve to in dicate the trend of the business. The sales depart ment, for instance, should make a periodic report showing the amount and character of sales, and similar information. It should also send in special reports, bearing on any movement in the field, that will be use ful in manufacturing. From the stores department the manager should receive a report of product on hand; from this and a manufacturing report of the orders in process he can intelligently place new shop orders. Other departmental reports of a similar char acter make the solution to the various problems of management more sure and accurate. The period icity of these departmental reports may vary, but in most cases they are rendered monthly. Some ac countants prefer to make such reports every four weeks; thus there will be a total of thirteen equal pe riods a year.