33 8 APPENDIX. 



Next, except for melting, which will be treated later, we 

 divide the gross total indirect expenses for each department by 

 the number of days' direct work done in it during the past year, 

 and get the cost factors per department as follows : * 



1. Patterns $o 82 



2. Molding I oo 



4. Mounting 90 



It is supposed that under the same management the cost 

 factors will not vary greatly from year to year. In this respect 

 they will resemble, to some extent, the phenomena of life insur- 

 ance ; so that such variations as may be found may be attributed 

 to causes the effects of which, in future cases, may be closely 

 approached. But in gaining this experience the following dis- 

 cussion may serve. 



The indirect expenses may be divided into two classes : those 

 like rent, insurance, salaries, etc., which are fixed charges ; and 

 those which, like attendance, wear, and waste, have a closer rela- 

 tion, say a direct ratio, to the number of men employed. 



Calling the fixed charges for a given time F ; the variable 

 charges, V ; the number of direct days' work in the same time, 

 D ; and the cost factor, either for the whole factory or for any 

 one department, C, we have 



F+V 

 ~^~ 



If we change suddenly the number of men employed, then D 

 will become D ' ; and Fwill become F', and 



C= F+ V 



For example, if ^=$12,000; F= $28,319, and = 42,500 

 d. w. 



Then C= $0.95. 



* We may simply take the quotient of the aggregate indirect expenses of the three 

 departments by their aggregate of days' direct work ($0.95) as a gross cost factor 

 for them all. This course will be more simple than the other, but its simplicity 

 will be purchased at too great a cost if we lose the opportunity for keeping the fore- 

 men up to the mark by comparing the expenses of their respective managements. 



