COST OF MANUFACTURING BUTTER 2OI 



surance, interest, and depreciation, were, at least in part, left 

 out of consideration. In accordance with estimate No. i, 

 page 3, of this book, the cost per pound of butter for manufac- 

 turing in a creamery manufacturing 67,200 pounds annually 

 amounts to 4.70 cents. For creamery No. 2, manufacturing 

 134,000 pounds of butter annually, the cost of manufacturing 

 is reduced to 3.08 cents per pound of butter. It is difficult 

 even in the best managed creameries to reduce the average 

 cost of manufacturing to less than from 2 to 3 cents per pound 

 if all expenses are accounted for. During the summer season 

 the cost of manufacturing will naturally be comparatively low, 

 but in the small creamery it will increase nearly in proportion 

 to the decrease in output. The larger plants are able to manu- 

 facture butter at a low cost during the summer season, but 

 it is equally true that some of the large plants are operating 

 under so heavy expense during the winter season that in reality 

 their advantage in the cost of manufacturing becomes insignif- 

 icant. Such conditions, however, when they occur are due to 

 lack of management. 



The cost of manufacturing could often be reduced by re- 

 ducing the general expenses, as are enumerated above. 



Labor usually constitutes the big item of expense. It is not 

 possible to make a statement as to what the cost of labor per 

 pound of butter should be. This cost depends primarily on the 

 size of the creamery. It is possible to increase the cost of labor 

 per pound of butter materially and at the same time greatly 

 increase the general profits to the creamery. It never pays to 

 engage a cheap man as butter maker, for although by so doing 

 the cost per pound of butter manufactured will be reduced, the 

 general profits will usually be reduced because the man who is 

 willing to work cheaply is a man without experience or without 

 even ordinary ability. Labor and how the cost thereof may be 

 reduced are discussed in Chapter VII. 



For the purpose of guarding against unnecessary expenses 

 it is advisable that a daily cost record be kept (Form XVII). 

 Such a record contains information that is most essential to 

 the manager. 



