30 



HARDWOOD RECORD 



Mr. Dayton explained fully how he arrived at 

 Uiese figures and if his basis of figuring Is ac- 

 cepted, the results unquestionably must be as he 

 stated. 



The several items that enter into the computa- 

 tion of veneer costs are the price of logs, ex- 

 penditures for labor and factory maintenance 

 and operation, overhead, fixed or general and 

 miscellaneous expenses, the average daily cut of 

 logs into each thickness of stock, and the aver- 

 age percentage of merchantable stock in each 

 size, grade and thickness produced from the 

 logs. 



A variation in any one of these items of cost 

 changes the final result, and. while two mills 

 may show approximately the same figures for 

 some of the items enumerated, it is highly im- 

 probable that the expenditures of any two mills 

 will be exactly the same on all of these items. 

 It follows conclusively, then, that the costs of 

 producing rotarv-cut stock will hardly be exact- 

 ly the same in any two mills, and that although 

 the systems of cost accounting may be similar, 

 the results shown will be different, and that 

 for any intelligent knowledge of the matter, 

 costs must be figured persistently and accurately 

 under the conditions existing and peculiar to 

 each Individual factory. 



For one veneer manufacturer to depend upon 

 the costs ascertained to be correct in some other 

 man's mill would be quite as ridiculous as the 

 way in which Dutch Joe took an inventory of 

 bis grocery stock. Dreading the tedious task 

 of stock ta"king, Joe went down to see his friend 

 Rickerman, a more energetic Dutchman, also in 

 the grocery business, and asked him how much 

 his recently completed inventory amounted to. 



11. J. BARNARD, INDIANAPOLIS, DIRECTOR. 



When Rickerman, rather unwillingly, produced 

 the figures, Joe took one prolonged survey of the 

 store and its contents and, with a sigh of relief, 

 remarked, "Veil, I guess I got aboud der same ; 

 1 pud id down." 



Our main objects in the continued discussion 

 of costs and cost accounting are, first, to en- 

 deavor to Induce every manufacturer to figure 

 costs intelligently and accurately in his own 

 plant ; next, to .show the relation between actual 

 costs and the prices for which our products 

 are commonly l)elng sold, and, finally, that if 

 some manufacturer finds, by comparison, that be- 

 cause of peculiar advantages be can produce 

 stock for less than the average costs, he may 

 take the benefit and demand the extra profit to 

 which his especial advanlages entitle him. 



Any cost figures I might give out at this time 

 ■would, therefore, be of absolutely no advan- 

 tage to anyone, except, possibly, for comparison 

 and to prove that ruling prices are, many times, 

 much lower than they should be. 



For Jog run stock, on tlie basis he outlined, 

 I believe that Mr. Dayton's figures are approxi- 

 mately correct, and of the mills that do rotary 

 cutting exclusively I believe that the average 

 co*t of operation per niacbine day. for the past 

 three years at least, will be found to be higher 

 rather than lower than Mr. Dayton's estimate 

 of $73 per day per machine. 



Where veneer and panel mills are combined 

 the additional general and miscellaneous and 

 heat, light and power expenses are compara- 

 tively small and the totals may be divided 

 with the panel department. Then the expenses 

 of the rotary mill for sizing, crating, shipping 

 freights and selling may be almost entirely 



eliminated, all of which might make a differ- 

 ence of .$30 or more per day : but let the rotary 

 department be increased so as to produce a large 

 quantity of rotary-cut stock for the market and 

 the expenses and costs of the rotary-cut stock 

 will be increased accordingly. 



All costs should include every item of expense 

 from the time a buyer starts out to purchase 

 logs until the stock is manufactured, sold, de- 

 livered and the cash for it has been received. 



In figuring the cost of production per ma- 

 chine per day, including all miscellaneous or 

 general expenses, we cannot safely figure on 

 short periods, but should take the results for a 

 year or more. If the record for the year shows 

 that at a total expense of $30,000 two machines 

 have operated 300 days each, or a total of 

 GOO machine days, we have a cost of $50 per 

 machine day. If, on the other hand, with a 

 total expense of $6,000 for the year we operate 

 one machine only thirty days, it brings the cost 

 of operation up to $200 per machine day. 



All accurate records of costs must be based 

 upon actual facts as they exist. The eternal 

 question should be not what might have been 

 or should have been, but what actually has been 

 accomplished and what did it cost. 



Perhaps no item that enters into the cost 

 of veneer production will vary more in different 

 mills than the quantity of logs cut into a given 

 thickness in one day on one machine. This 

 depends largely upon the speed of the machine 

 and the length and class of stock to be manu- 

 factured. At a fixed expense for operation the 

 quantity of logs cut by a machine in a given 

 time absolutely controls the cost of production, 

 unless the increased speed is offset by greater 

 waste, and a consequent reduction in the mer- 

 chantable product. 



The product of the logs in any class of stock 

 should be shown by the record of sales, wiUi 

 the inventory of stock of precisely the same 

 grade. A record for a big percentage of prod- 

 uct from the logs and a profit that shows only 

 on the books amounts to nothing, if it is off- 

 set by a warehouse full of scrap and junk fit 

 only for fuel. A cost accounting system that 

 is effective should show results not only on 

 the books, but in the bank. 



But let us assume that a manufacturer has a 

 complete record of all of the logs, labor and 

 operating expenses entering into the manufac- 

 ture of each thickness of each kind of wood for 

 a year or more. He has also kept careful ac- 

 count of the amount of each kind and thick- 

 ness of stock produced, and has charged to 

 each its correct proportion of depreciation and 

 miscellaneous expenses, so that he has an abso- 

 lutely accurate account of the average cost tor 

 the year of each thickness of each kind of wood 

 manufactured. He h.TS an interesting lot of fig- 

 ures and a lot of interesting information. But 

 what does it really amount to? 



Under each thickne&s of each kind of wood 

 he has lumped select faces with backs and cen- 

 ter stock, combined large sizes with log run 

 and off-falls : he lias then struck an average 

 and arrived at the flat cost per thousand feet 

 of the whole mixed mess. 



If he has an unlimited demand for log run 

 stock he will do very well, but if he has a 

 call for Vs-inch No. 1 faces tor flush panel 

 doors, 14-iuch pin block stock in whole pieces, 

 or 1-20-inch crossbanding for large, flat top 

 desks, his records and cost accounts contain 

 no data upon which to intelligently figure a 

 legitimate selling price. 



The most complete and the only approximate 

 satisfactory system that I have found for fig- 

 uring costs of rotary-cut stocks of all the vari- 

 ous kinds, thicknesses, grades and sizes, is to 

 figure the cost of each order or lot of stock 

 produced. 



Starting in the yard, the report on each order 

 shows the number of feet of logs used, includ- 

 ing waste incident to cutting to required lengths 

 and cutting out rot, shake or other serious de- 

 fects, and the labor employed to dragsavv and 

 put them into the vats. The report on each 

 order shows also the time of the rotary ma- 

 chine, including the log peelers, cutters and 

 machine tenders, the time of the clipper men 

 and helpers, the time of the dryers and the labor 

 employed, the labor employed for crate making, 

 grading and packing, the labor employed to load 

 and ship. and. sometimes, the expense of drayage. 

 Then, in the cost of each order is included 

 its proportion of superintendence, heat, light and 

 power, depreciation, selling, office and miscellane- 

 ous expenses, including every item of expendi- 

 ture not previously covered. 



A summary of the reports on each order 

 shows the percentage of product from the logs 

 in the thickness, grade and sizes specified, and 

 the cost per 1,000 feet. 



If freight is allowed, it is added to the total 

 cost and the amount compared with the amount 

 of the selling invoice, less any discounts or 

 deductions, showing the profit or loss on each 

 order or lot of stock manufactured. 



If correct accounts are kept the costs of all 

 orders or lots of stocks produced during any 

 period of operation will amount to the total 

 disbursements of the plant for the same period. 



When such records of cost cover a long pe- 

 riod of operation, the costs of duplicate orders 

 can be compared to great advantage and they 

 form a basis upon which to safely and intelli- 

 gently estimate the selling price for any kind, 

 thickness, grade and size of stock that has 

 ever before gone through the mill. 



Some one has said that such a system of cost 

 accounting necessitates a great deal of work; 

 but it doesn't require as much time and de- 

 tail as might at first be supposed, and I am 

 fully convinced that the requisites for success 

 in tlie veneer business are eternal vigilance, 

 careful and persistent attention to details, and at 

 least a little luck. 



This paper engendered considerable dis- 

 cussion, D. E. Kline, E. C. Dayton, P. B. 

 Raymond, S. B. Anderson and M. C. Dow, 

 Jr., taking part. The discussion endeid the 

 morning session. 



TUESDAY AFTERNOON SESSION 



A pleasing buffet luncheon was served at 

 one o'clock in the convention hall, which 

 effectually prevented the members from 

 scattering and missing the afternoon ses- 

 sion. 



S. B. Anderson of the Anderson-TuUy 

 Company, Memphis, Tenn., opened the ses- 



R. C. DAYTON, RHINELANDER, WIS., 

 DIRECTOR. 



sion with a brief description of what he saw 

 on his recent trip through Europe. He 

 stated that all over Europe a great deal of 

 three-ply veneer shipped in from Kussia is 

 being used, while very little plain or single- 

 ply stock is consumed. When they don't 

 use three-ply stuff, they usually use sawed 

 veneer, glued up. 



lie went into some detail along the lines 

 of forest conservation in Germany, discuss- 

 ing in particular the wonderful white pine 

 plantations which had been raised on land 

 where pine originally was an unknown quan- 

 tity. The close utilization of the tree in its 

 entirety was pointed out, Mr. Anderson em- 

 phasizing the fact that besides bringing 

 directly a greater return, it also militated 

 against the fire hazard to such an extent as 

 to practically eliminate it. 



Mr. Anderson then went more into de- 

 tail as to the close utilization of every foot 

 of available land in the thickly populated 



