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HARDWOOD RECORD 



a[ipeaxs that the situation is largely that of the house divided agaiust 

 itself. Despite the facts which we mention in the beginning, to our 

 personal knowledge, some manufacturers are offering their goods far 

 below cost, either ignorantlr, or with a total disregard for other 

 concerns which have counted the cost. Or, to express it ditferontly, 

 we, unlike other concerns of the present strenuous times, instead of 

 standing by one another for a reasonable price and for improved 

 conditions, seem ready to cut and slash prices within our own ranks, 

 each vieing with the other to secure the business, irrespective of the 

 consideration as to whether or not he is justified in furnishing the 

 goods at the accepted price. 



The disease is a complicated one; the symptoms are numerous, 

 and any and all of them deserving of the most serious examination 

 and diagnosis, and the duty has been assigned me to consider briefly, 

 only a single remedy, which in my humble judgment, if it could be 

 properly applied, would largely eradicate the entire trouble, and that 

 remedy is adequate cost accounting in the manufacture of veneers. 



We have all no doubt heard of the fabulous fiddler who made the 

 wager that he could fiddle down a stupendous bridge. In the face 

 of jeers and hissing, the fiddler began to tune Ids fiddle, playing it, 

 only to tune it again and try again. At length, to the astonish- 

 ment of his skeptical si)ectators, the l)ri<!ge trembles; it begins to 

 vibrate as he strikes a certain note. The longer he plays that note. 

 the more the bridge vibrates, and at last reels, totters, falls! The 

 fiddler had struck the chord to which the entire structure was tuned. 

 Not long since, a number of men were struggling and pushing, trying 

 to tear down the brick wall over an arch. At this moment a mechanic 

 appeared. With a single stroke of the crowbar he knocks out the key- 

 stone in the arch and — the wall tumbles! 



In every serious proposition there is always some note to whicli 

 the whole thing is attuned; some keystone upon which the whole 

 superstructure or difficulty rests. Kemove the keystone, and, the 

 situation cures itself, and if we are not very much in error, the 

 pivotal point upon which our numerous troubles turn, is the problem 

 of costs, and in stating our subject, we feel that we can do no 

 better than to express it in the Biblical phrase, ' ' Which of you first 

 sitteth not down and counteth the cost ? ' ' 



The problem of cost accounting is of comparatively recent growth, 

 and the necessity of an adequate cost system is brought about mainly 

 by the three following facts: 



1 — The wonderful natural resources of the United States. 



2 — The tendency to low prices caused by competition. 



3 — The influence of trusts and combines. 



But no matter what occasioned the necessity, it is sufficient for 

 us to know the necessity exists, and we are reminded of the wag 

 who was carrying the philosopher across the river in a small boat. 

 While on the journey the philosopher asked the wag, "Do you 

 understand astronomy?" The wag answered, ''No," whereupon tlu' 

 philosopher added, ' ' Then a third of your life is lost. " "Do you 

 understand metaphysics?" "No." "Then," said the philosopher, 

 "anotlier third of your life has been lost." At this interval a hole 

 was knocked in the boat by a treaeherous rock, and the wag said to 

 the philosopher, "Can j'ou swim?" "No," said 1lie ])hilos()|)her. 

 "Then the whole of your life is lost!" Or, in making tlu^ applica- 

 tion, the manufacturer of today must know the cost to manufacture, 

 otherwise, as certainly as there are treacherous rocks underneath 

 the placid surface of the waters, the whole of that man 'a life is lost. 

 In other words, when an order which we desire to secure hinges n" 

 ten cents on a thousand, who is there so stupid but that he will 

 appreciate the ab.solute necessity of his knowing accurately and 

 exactly what his veneers cost him? If the veneers in question cost 

 the manufacturer $3.00, he would be safe in selling at .$3.25. Hut 

 suppose that the manufarturer rlid not know, and sold at $3.25, 

 veneers that cost him $3.r>0 to manufai'turel Can you swim? Do 

 yon sit down and count the cost? 



We have heard of the urchin who was kept in at school because 

 he could not spell "yacht," yet the boats he built swam beautifully, 

 and there are those who have no cost system, who by a kind of busi- 

 ness instinct or sixth sense, if you please, seem to know intuitively 



the coil to produce veneers, but men of such business shrewdness and 

 acumen arc not one in thousands, and it would be an exceedingly 

 hazardous position for one to presume that he is that one. There 

 is, too, the story of the country merchant who welcomed the falling 

 oft' in his business, because it aft'ordod him an ojiportunity to figure 

 on the card system which he had lately installed. There are cost 

 accounting systems so tedious and so problematical as to require so 

 much additional clerical force as to render them impracticable. Then, 

 fortunate it would be, indeed, if some method of determining pro- 

 duction cost were presented, which on the one hand relieves the prob- 

 lem of tedium and clerical work, and avoids the other extreme of 

 guessing or relying on intuition. 



We have had the pleasure of reading valuable ii:L]>ers ou veneer 

 costs, and have seen very lucid presentations of the matter of deter- 

 inining the cost to manufacture veneers under conditions peculiar 

 to some one locality, by which line of argument some arbitrary price 

 would be established. To our mind, to establish an arbitrary price, 

 even if it were possible, would be illogical, inasmuch as it would 

 tend to eliminate lai-gely all endeavor to attain higher skill and 

 greater efficiency and better economy in tlic tnaiuifacture uf our 

 product, as numy of us would be satisfied if we were making reason- 

 able money by selling at the arbitrary price, when otherwise we 

 would be studying to eliminate wastes and to cut down expenses in 

 every way possible. In other words, to umlertake to establish an 

 arbitrary price in the sale of veneers is just as illogical and as 

 impossible as to undertake to establish by law a ratio between the 

 metals, gold and silver, inasmuch as both tlic inice and the ratio 

 are unalterably fixed by the great uiulerlying principles of economy. 



Then, would we not welcome that system of cost accounting which 

 would enable each of us, in some simple and practical way. to gather 

 together in one lump sum the entire cost which represents a certain 

 product, that we might know that as long as we receive for such 

 product an amount anvthiug in excess of that sum, our balance was 

 sure to be on the right side of the ledger? A system comprehen- 

 sive enough to include everything; simple enough to be used every 

 time we are figuring on an order, for "Which of you sitteth not 

 down first and counteth the cost?" 



We a|)preciate the magnitude of the undertaking, likewise our 

 inadequacy to the task, Vnit at the risk of all kinds of criticism, 

 we arc willing to make the effort for the good of the cause, and 

 that, too, not so iiuudi because of any confidence we have in our 

 own formula as being the simplest and most practical, or even the 

 most accurate, as with the hope of provoking such discussion and 

 consideration as will result in the one formula wliii-h is to all of 

 us most satisfactor.v, and best adapted. 



The fiu-mula wiiich we offer is based on tlic experience of the 

 individual numufactiirer, and leaves little o|ip(M-tunity or necessity 

 for guess work. Kacli of you, doubtless, alreadys knows what your 

 logs cost you on the average. If you do not know, it is a matter 

 that can be easily determined by dividing the total cost of the logs 

 laid down on the yard, liy tlic total niunbcf of I'cct delivered. Each 

 of you no doubt knows the average number of feet of veneer of 

 any given thickness that you can get out of a tliousand feet of 

 average logs. Kach of you knows the average luimlinr of feet of 

 logs that you are able to cut in a day into veneer of any given 

 thickness. Then, on the presum|)tion that each manufacturer knows. 

 or can determine the averages above referred to, the fornuila which 

 we suggest becomes practical, iimsnnu-h as the greater nundier of 

 the other factors entering into the jiroblem lan be deti-nnined with 

 absolute tu'curaiy. 



We submit our analysis of the chiucnts entering into cost account- 

 ing, having employed the brace method because of its simplicity, and 

 the blanks ojipositc the several factors are filled by figures taken 

 at random, merely for illustrative purposes, without any effort, what- 

 ever, to make them representative. Tor each mamifacturer. the 



figures representing the several factors would naturally vary ; mil 



ing to the different prices at which logs can be hml, the cost of 

 labor, its efficiency, etc. 



