The above figures are all that are needed so far as the labor end of the comparison is concerned. In fact, the non-productive labor is not necessary and is shown here merely as a matter of interest, as are also the proportionate percentages of each division to the total pay-roll, for it will be remembered that the productive labor is the figure used in all costs on which the expense is calculated.
17. Departmental Expenses. Against the amount of productive labor for each department shown in the statement just made, place the total expenses for the same departments. This is readily found by again referring to the Private Ledger, where the amount of Operating Expense, Department E, for the same months the pay-rolls were tabulated, appears as in Fig. 2. The expenses of all the other departments should be similarly treated.
Fig. 2. Private Ledger Operating Expense Account
18. General Expense. The general expense of a plant, for the sake of convenience as well as information, is kept usually in considerable detail, different ledger accounts being opened to carry the various subdivisions of expense. The use of a General Expense Account in the ledger is not recommended, for its very name has the earmarks of a general dumping ground for all miscellaneous items, and is often found a convenient place to hide expense, trusting it will there be lost sight of and thereby escape observation.
The combined total of these various expense accounts is the total general expense, a part of which each productive job is to carry. As they now appear in the ledger as separate accounts, Executive, Office, Store, Power, Yard, Taxes, Insurance, Printing and Stationery, Telephone and Telegraph, Postage, etc., it will be seen that each account is in itself but a part of the amount to be distributed, and, to better show this combined total, these individual accounts should be closed out monthly and brought together in another account, called General Expense Distribution. This is done by journal entry.
| Dr. | Cr. | |||||||||
| $10,293 | 28 | General | Expense Distribution | |||||||
| Executive Salaries | ||||||||||
| Insurance | ||||||||||
| Taxes | ||||||||||
| Depreciation | ||||||||||
| Freight | ||||||||||
| Express | ||||||||||
| Cartage | ||||||||||
| Printing and Stationery | ||||||||||
| Telephone and Telegraph | ||||||||||
| Traveling Expense | ||||||||||
| Postage | ||||||||||
| Legal | ||||||||||
| Water | ||||||||||
| Advertising | ||||||||||
| Etc. | ||||||||||
| Operating Expense Dept. | A | |||||||||
| " | B | |||||||||
| " | C | |||||||||
| " | D | $10,293 | 28 | |||||||
These accounts are now balanced out and combined in total in the Distribution Account. The Distribution Account is now examined to ascertain the total general expense for the same six months previously used, and the Private Ledger shows it to be $67,840.00, Fig. 3.