Fig. 15 shows a form adapted to many lines. This form is intended for a record of the cost of parts, but could be used for assembled machine costs. Provision is made for detailed labor costs by man, numbers, and kind of work. It will be noted that, after obtaining the actual manufacturing cost—material, labor, and factory burden—profits are added. In our opinion, profits have no place in cost records. To establish a selling price, it is legitimate to add a factory or manufacturing profit before adding a percentage to cover sales expense and a selling profit, but the addition of these percentages has no bearing on the actual manufacturing cost.
Fig. 16 is a representative form for a machine shop. All operations and materials are listed by name, totals only being recorded. Factory expense is added to the labor cost, while a percentage to cover loss and waste is added to material costs. This form is subject to the criticism that all expense is added as one item—no provision is made for segregating the expense of each shop.
The form shown in Fig. 17 is adapted to a small shop, or for repair jobs. This is the most simple form that could be devised; columns are provided for all essential information, and all items are to be written in.
Fig. 16. Cost Summary for Use of a Machine Shop
45. Comparative Cost Records. The chief value of cost statistics lies in the opportunity offered for comparison. The fact that the last lot of part No. 10 cost $1.17 each, does not, of itself, indicate that the cost is either low or excessive; but if our records show that two previous lots have cost $1.20 and $1.21 each, the comparison reveals the fact that the cost is low.
Valuable as this comparison is, it would be still more valuable if it showed why the cost is less. Suppose labor and material costs are segregated. Comparison shows that the reduction of three cents is made up of one cent material and two cents labor. Now if the quantity and cost of each kind of material used, and the time and cost of each operation are segregated, an analysis will show the exact operations on which the saving has been made. It will be found, perhaps, that the cost of operation No. 10 was actually decreased three cents, but that the cost of No. 16 increased one cent. Why these variations? Was some unusually favorable condition responsible for the saving on No. 10, or can the new cost be maintained? Can the cost of No. 16 be brought back to the former figure?—these are the questions to be answered by the production engineer. The records of the accountant supply him with the means of comparison—point out both saving and waste. Profiting by the information, the engineer devises ways of approaching more closely to maximum standards of efficiency.
Fig. 17. Cost Summary for Small Shops and Repair Jobs
Comparative records should, therefore, provide for a comparison of every item entering into manufacturing cost. Comparisons should be based on standard units; if two jobs are to be compared, they must be identical or the comparison is of no particular value. The modern method of manufacturing standard parts makes comparison of practical value. Savings and wastes are more readily located in the manufacture of parts, than in building a complete machine.