HARDWOOD RECORD 



31 



We beg to submit, then, the following: 



FORMULA FOR DETER.MIMI.NG THE COST IX VEXEER .MANUFACTURING 



First Cost: 



Logs, per M. feet 



Crating, etc., per M. feet logs. 



Direct labor, per day - .$36.00 — If 36.00 



Burden : 



Indirect labor, per dii.v 10.00 



Power, per day 10.00 



Taxes, per day 1.00 



Insurance, per day :{.00 



Heat and ligbt, per day 1.00 



Rent, ijer day 



Depreciation, per day 



Upkeep, per day 5.00 



General expense, per day 5.00 — $35.00 



Selling Expense : 



Office, per day 2.00 



Salesman, per day 3.0O 



Advertising, per day 1.00 



Traveling, per day 



Indirect expense 3.00 — $ 0.00 



Total flnal cost per day (not counting cost 



of logs and crating) — .$80.00 



To apply the above formula: 



Suppose it is desired to determine the cost to manufacture and sell 

 1/24" stock— 



If the logs cost $22.00 delivered; 

 If crating costs $2.00 per M. feet of logs; 

 If we cut an average of 3 M. feet of logs per day; 

 If 1 M. feet of average logs make an average of 20 il. feet of 

 veneer, 

 we proceed as follows: 



Since our total daily expense of running, exclusive of cost of logs ' 

 and crating, is found to be $80.00, and since we average cutting 3 M. 

 feet of logs per day, it follows that the average cost to manufacture 

 and sell the veneer made from 1 M. feet of logs is $26.6G. 

 Then we have — ■ 



Cost of logs (say) $22.00 per M. 



Crating, etc 2.00 per M. feet logs 



Manufacturing and selling 26.66 per M. feet logs 



Making a total of $50.66 



to cover the cost of logs, orating, manufacturing and .selling the veneer 

 cut from 1 M. feet of logs. 



But, 1 M. feet of logs, we supposed, made 20 M. feet of veneer; 

 then the cost of 1 M. feet of veneer would be one-twentieth of 

 $50.66, or $2.53. 



But, we generally are asked to quote a price on the goods, deliv- 

 ered. To find the cost of 1/24" veneer (poplar), delivered on, say, 

 a 40-cent freight rate, 



1 M. feet of 1/24" poplar veneer weighs 150 lbs. 



Then, 20 M. feet would weigh 3,000 lbs. 



which, on a 40-eent rate, would be $12.00 freight on veneer cut from 

 1 M. feet of logs. 



Then, adding the $12.00 to the cost above found, $50.66, we have 

 $62.66 for the, total cost of the veneer from 1 M. feet of logs 

 delivered; or, dividing by 20, the number of thousands of feet of 

 veneer we get from 1 M. feet of logs, we have $3.13 — the cost of 

 1 M. feet of 1/24" veneer delivered. Suppose the manufacturer 

 wishes to make 20 per cent profit; $3.13x1.20 is $3.75, the price at 

 which he must sell. 



As we have already stated, the figures opposite the various items 

 of expense in the above illustration are taken at random. To apply 

 the formula to our own mill, opposite each factor place the figures 

 representing the cost based on our own expenses and proceed as 

 illustrated, all the time being guided by our experience and the facts 

 in our case, and the result will surely indicate that price below which 

 we can not afford to go without selling at a loss, and even then it is 

 practically certain that items of expense will creep in for w-hich no 

 provision is made. 



We venture the assertion that the results which we will get in testing 

 this out by our own experience will be surprising even to ourselves, 

 and that we will find that our veneers are really costing us very 

 much more than we had imagined. 



The interests of the manufacturer and consumer of veneer are, in 

 a sense, identical. The consumer can not hope to get satisfactory 

 material without paying a fair price. No one knows better than he 



that, if he buys for a period below cost, he will soon put the manu- 

 facturer out of business, and thereby demoralize his own business, 

 inasmuch as he demoralizes the source of his supplies. Our friend, 

 the consumer of veneers, is compelled to have the veneer, and he 

 would prefer, in most cases, to buy it, rather than manufacture it. 

 At any rate, under equally favorable conditions, wo should be able 

 to manufacture it just as economically as he, and he is willing to 

 pay a reasonable profit. This being true, if any of us are selling 

 veneers at a loss, it is our own fault. If the consumer can not get 

 the veneer at his price, he will take it at ours, allowing us a reason- 

 able profit, and if we do not get such price, it is simply because we 

 have not the backbone to stand for it. 



The remedy which we beg to prescribe is: 



1. That we all adopt some adequate system of cost accounting by 

 which we can know what our veneers cost us. 



2. That we stand together as one man and demand a price which 

 will give to us a reasonable profit. This will not mean, of course, 

 that every man will sell his 1/24" poplar at $3.75 a thousand, but it 

 does mean that every man will sell his goods at a figure above that 

 which represents the cost of production. 



To accomplish this end, we appreciate the necessity of all veneer 

 manufacturers coming into the association and standing side by 

 side in one solid phalanx for living prices. In union there is 

 strength. Sticks taken separately are easily broken; but bundle 

 them together, and the condition is changed. A house divided against 

 itself can not stand. This is the day of combines, trusts and unions, 

 and woe betide the people of any trade who are heedless of the call 

 of the association. The same powder which ignited in your hand 

 goes off with only a puff and smoke, confined in the rifle barrel, 

 where all of its power is exerted in a single direction and applied at 

 one point, sends the rifle ball through the armor of steel; so we 

 by united effort, concerted and harmonious action, standing together, 

 and as one man, exerting our power all in the same direction, can 

 accomplish any result within reason. Then let us one and all employ 

 our best eiforts to bring into the association those who are now out 

 of it; having brought them into the association, let us adopt as our 

 motto, "Vis unita fortior," "Strength united is strong." And let 

 us exert our energy in the direction of profitable prices, and verily, 

 we believe, all other difiBculties will take care of themselves. In the 

 future, before quoting prices, which of us will not first sit down and 

 count the cost? 



F. C. RICE'S PAPER 



The chief element of ' ' Veneer Factory Costs ' ' is the labor and 

 logs, but the other expenditures must not be overlooked. To obtain 

 the cost of labor is naturally a comparatively simple matter, the time 

 being kept by the foreman, who turns it into the oflSce every morn- 

 ing, together with the drag sawyer's report with the different kind 

 of woods, also the clipper's report, which shows the time spent on 

 each order, and the number of pieces of veneer and their dimensions 

 handled during the day. 



These reports are carefully checked by the bookkeeper and entered 

 on the monthly statement as the cost of logs, labor involved, and the 

 selling price of veneer manufactured per day. At the end of the 

 month these particulars are totaled, and at the same time show a 

 brief statement that will be of real value as a daily guide. 



We think it desirable wherever possible to introduce the piece- 

 work system of paying labor, the opportunities for "holding back" 

 on the output being so great and the capacities of the different men 

 varying so widely that payment by results is the only just method 

 for both workman and employer. If a fair rate is adopted, and 

 notice given that no cut will be made on account of increased pro- 

 duction, it will be an inducement for the men to put forth their 

 best efforts, and the more this can be worked out the easier it will 

 be to arrive at the actual cost figures. 



The cost of veneer varies on the different kinds of woods used by 

 the manufacturer. We should be able to manufacture maple and 

 beech veneers for less money than our neighbors in the South, and 

 they, on the other hand, manufacture gum veneer much cheaper 



