4. Uses of business statistics.—It would be equally futile to seek to classify the various uses to which sta tistics may be put in the conduct of a business. At best, a general treatment of the subject can give only some suggestions of this nature. This can best be done by a rather full treatment of their use in some definite phase of business administration. Because of their importance in the general scheme of business or ganization, departmental reports have been chosen as the subject of this special study.
5. How much information should department heads be given?—Some managers believe that the head of a branch should not be informed as to the amount of profits made by his branch. They feel that the man ager might use the information as a lever for securing an increase in salary. If it is desired to reduce the apparent profits of the branch and at the same time allow the manager to have the results in dollars and cents, this can be accomplished thru the medium of an arbitrary overhead charge. When the statement of financial results is given to the branch manager, the gross profits will be shown. From the gross profit will be deducted the amount of the arbitrary charge for overhead, which will, of course, reduce the net profit. In this way, the real profitableness of the branch may be concealed from the branch manager, who will not know the details of the overhead charge.
There is no real reason why department heads should be kept in the dark as to the progress which is made by their departments. Of course, a depart ment head need not be informed as to is going on in another department, nor should he be entitled to information as to the condition of the business as a whole. But, the department manager will not have that personal interest in initiating new policies or put ting new projects into operation unless he can learn the financial results of these undertakings. The de partment heads will be able to guide themselves in new projects by having at hand records of the re sults obtained by previous undertakings of a similar nature.
6. Record of orders and sales.—The manager should receive a statement of the total orders each month, or if the department is a large one and is doing a large volume of business, these reports may be made up daily. The report should show the orders re ceived up to the beginning of the present month, the orders of the present month, and the orders received during the preceding month. This information will
be accumulated from day to day or month to month. From this amount should be deducted the amount of orders delivered and the amount of cancelations, leav ing as the balance the amount of unfilled orders on hand at the present time. This information should be shown in comparative form, giving the results of one or more preceding years, so that the department man ager can endeavor to increase his sales, speed up de liveries or, if orders fall off, to determine the causes thereof.
A similar comparative record of the sales should be furnished him. The sales for the current fiscal pe riod up to the first of the month, the sales of the month, and the sales for the preceding month should be set forth; the record" of sales should show also the amount of the returns and allowances to date. In ad dition, the sales records of the individual salesmen and saleswomen in the departments should be furnished.
7. Inventory and purchase records should be avail able.—Inventory and purchase records should be fur nished at periodic intervals. There is always great danger of a department manager's overbuying, or al lowing stock to accumulate, thus tying up an unneces sary amount of capital in inventories. The informa tion furnished to the department managers should give the inventory on hand at the last report date, the purchases during the interval, and from the aggre gate of these two amounts, the cost of the sales should be deducted. The last amount may be conveniently found, either by reducing the sales by the amount of the departmental mark-up, or by reducing the sales by the amount of average gross profits realized by the department in preceding periods.
There should also be furnished to the department head, if he is allowed to purchase his own material or merchandise, a record of the amount of merchandise purchase orders as yet unfilled. If some of the purchase orders apply to the current season and some to a later season, this information should be clearly set forth. With the information as to his present stock, and the amount of undelivered pur chase orders, the department head is enabled to guide himself' in meeting the requirements for stock.