Members.

All manufacturing confectioners, all manufacturers of chocolate, licorice, confections, pop-corn confectionery and chewing gum, of reputable mercantile standing, selling to the wholesale trade, shall be eligible to active membership.

General service rendered to the membership by the association is varied and a great credit to it.

The departments maintained by the association and the sources of information always available to members are the following:

Circulars are issued from time to time by all of these departments containing valuable information. Circulars containing information of a general character are also issued from time to time by the Executive Committee.

CHAPTER VIII
COSTS

YOUR costs are made up of three classes of items: Labor of making; material they are made of; the container they are sold in. The other expenses of the doing of business are the “overhead,” so called.

To arrive at the cost of goods by the box and to know what profit you ought to expect, should be your first endeavor.

Selling is ninety per cent. of any business. To make sales enough to keep your plant going to its full capacity and be able to refuse undesirable business should be your constant aim. Then and only then are you making the greatest profit possible from your investment.

Your labor cost of making any piece of goods is easily figured. If a man, a boy and a girl turn out one hundred boxes in a day, the sum of the wages you pay them divided by one hundred gives the labor cost per box.

The material cost per box is easily found by finding how much raw corn it takes to give you pop-corn for a batch. Figure its cost. The candy and other materials you mix with a batch cost you a certain amount. Divide the sum of these by the number of boxes you get from a batch and add the cost of paper, string and box, then you have the material cost.

“Overhead” contains a large number of items and is the class of costs that is the worst to figure. It contains rent, heat, light, power, shipping, freight, express, cartage, advertising, printing, postage, stationery, insurance, taxes, repairs, depreciation, and all non-productive labor, such as sweeping out shop, bookkeeping, managing, etc. You must take these, figure the total for a week or a month, divide by the number of working days in the week or month, then divide by one hundred, the number of boxes made in a day. Then you have the “overhead” cost per box.

Add together the “overhead,” material and labor cost per box and you have the total cost per box if you are running your shop to capacity on that piece. Remember, in figuring your selling price and profit that making several kinds in a day increases the cost per box because of the time and labor lost in getting ready, and remember that some dull days will come when your “overhead” continues on just the same, but you have less boxes of goods to carry it.

Before you turn a wheel you should estimate your “overhead” expenses, and then watch them close to see that you do not increase them.

The manufacturing retailer receives one hundred cents of the consumers’ dollar. The wholesale manufacturer must sell to the retailer at a price at which the retailer can make a profit.

A wholesaler gets from sixty to seventy-five cents from the retailer for goods sold by the retailer at one dollar.

Some goods are sold for less but only at a reduced quality, or the loss of part of the legitimate profit.

When you put in new machinery that cuts cost you keep the saving in your own business. Talk quality, maintain the selling price and put part of your saving into selling endeavor to increase your business and the other part into a bank account. Cutting prices pays no one a profit.

You ask how much profit there is in pop-corn?

You know of fortunes made in pop-corn; some from buttered pop-corn; some from sugared pop-corn. Some from pop-corn cakes that sell for a cent, some from pop-corn packages that sell for five cents. In one case the goods were sold all retail, in another at wholesale. In one case a local business, in another nation-wide business.

What is profit? Net profit is the return over and above all expenses. Gross profit is the return over the cost of simply making the goods.

What is cost? Prime cost, which is the material plus the actual labor of making, or it may be the total cost with all the expenses of doing business added.

You might make a gross profit of two hundred per cent. of your prime cost, which might be sixty per cent. of your sales and then you might make twenty per cent. net profit on your sales, or sixty per cent. net profit on your prime cost. But it is possible to come out with no net profit in the end. In other words you must understand that the part of the cost that will determine your profit is what is called the “overhead,” meaning what is termed the operating expenses, something that is up to you and you alone.

To prevent errors you should figure your profit percentage on your selling price, because the sales figures are always handy to get at.

Thus if you find the gross cost of a box of pop-corn to be twenty-five cents and you sell it for fifty cents, your twenty-five cents profit is fifty per cent, of your sales.

A small net profit and turning your money over often will amount up big in the run of a year.

If you make a net profit of twenty per cent. and turn your money over twelve times a year you are making two hundred and forty per cent. upon your working capital.

Returning to your question: “What profit is there in pop-corn?”

Selling Price Prime
Cost 		Gross
Profit 		Per Cent.
Sales 		Per Cent.
of Cost
Salted Pop-corn 5c per bag 1 cts. 4 cts. 80 400
Buttered Pop-corn 5c per bag 2 “ 3 “ 60 150
Sugared Pop-corn 5c per small bag 1 “ 4 “ 80 400
Pop-corn Brittle 50c per pound 20 “ 30 “ 60 150
Pop-corn Bar 10c each 2 “ 8 “ 80 400
Pop-corn Brick 5c per package 1½ “ 3½ “ 70 233
Pop-corn Crispette 5c per package 1 “ 4 “ 80 400

Your costs will perhaps show some variation from these figures, for it is not to be expected that costs will be the same everywhere.

The costs here given are figured from the formulas in this book using the machinery herein described. They are not the lowest at which the goods can be produced, and of course, you see that they contain no “Overhead” and therefore are gross and not net profit.

No two men running business under identical conditions will have the same prime cost, gross cost, or gross profit, but they may come out with an equal net profit.

The only thing by which you can judge the future is the past. All information and figures in this book are from records compiled from years of experience and practice.