All statistical data gain in value if presented in such a manner that contrasts and comparisons may be drawn. Thus in Figure 24 (page 280) , the costs are so presented that the maximum, minimum and aver age costs of a large number of pieces of one kind can be computed easily and quickly. In Figure 26 (page 297) , a comparison between the data for the given month and the average for the period since the first of the year, is made with ease.
This method of contrasting results of a given period with those of some other period is quite common. Ex pense records are usually compiled in this manner, the idea being that any change in values will be more quickly noted, and inquired into if necessary. The weakness in this method is that it is based on the assumption that other factors remain constant, which may or may not be true. This is well illustrated in Figure 26, page 297, which represents a typical re port, where the items for the period considered are compared with the average of such periods since the beginning of the year. While such comparisons are useful and may suffice for some purposes, they are not sufficient for others where the standards of measure ment must be more definite.
Thus, it may be important to know the value of the output of the factory for a given period as compared with some other period, but it is more valuable to know the output per unit of capital invested, or per em ploye at work. The total amount of coal burned in the power plant for the month, as compared to other months, is worth knowing; but the cost of the coal burned per horsepower hour is a much more intelli gent check on the efficiency of the power station. The cost of a given article is an important matter, but its comparative cost judged by other performances may be much more important. It will be noted that this form of comparison is very different from the first method discussed. In the first method, comparison is made between performances; while in the latter, the comparison is made between the performances and a standard of some kind. • 12. Standards.—This principle of standards for comparison should be carefully noted. If standards of performance can be established, cost data can be in terpreted with a great degree of accuracy and intelli gence. This is illustrated in the case of the power plant just referred to. The amount of coal per horse power hour that should be consumed under normal conditions in a given power house, can be determined with fair accuracy, and any departure therefrom should be explainable on the analysis sheet, and with out regard to past or future performances. If, again,
it is known what the ratio of direct labor to indirect labor should be, the manager has a standard whereby he can judge the indirect labor much more accurately than he can by comparing the results of several periods where conditions may be widely different.
The whole tendency in modern manufacturing and industrial enterprises is to find standards of perfor mance which can be used not only as a criterion after completion, but also as a means of predicting perform ance before it is started. Viewed from this standpoint, the importance of cost finding is self-evident, and its value to the manager increases as competition becomes keener.
13. Graphic reports.—The comparison of statisti cal results with one another, and with a common stand ard, is greatly facilitated by graphic methods which show the history of any item under examination. These methods also make it much easier to compare different sets of data, and indicate tendencies much more clearly than tabulated statements, which are always difficult to summarize visually. Figure 27, opposite, shows, graphically, the history of a set of costs incurred in operating a power house, similar to those listed in Figure 26 (p. 297). The tendencies of such accounts can by this method be checked much more readily than when the same values are expressed in tabulated figures. In the illustration, a sudden rise is shown on the curve of totals about February 28th. The origin of this rise is easily traceable in curves 1 and 3, and evidently, is due to some repair work. The graphic method is of very wide applica tion and is very useful in all cases where a large num ber of figures are to be assembled in tangible form.
14. Making use of reports.—It will be noted that it costs money to compile reports and for that reason great care should be used in selecting the reports that are considered necessary for managerial control. Un less the reports are of some use, and unless they tell something of value which bears on the cost of pro duction or the conduct of the business, they are a source of wasted money and should be discontinued.