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COUNTING COST s^ 

 s^ IS COINING CASH 



How much does it cost to produce, or sell a flower f This is a question few 

 florists can answer, but we must know our costs if we are to continue to suc- 

 ceed. Here are some thoughts on the subject by the president of the Illinois 

 Association of Public Accountants. 



m^t^l^^Sm 



T was not so long ago that 



I had a laundryman been 

 asked the simple question, 

 "How much does it cost 

 you to wash a collar!" he 

 %|i «» would have replied, "How 

 /I^-^ should I know?" But he 

 /#y^^ knows now. The National 

 —11 Association of Laundry- 

 men took up the matter of 

 cost accounting for its members; a sys- 

 tem was devised by an expert account- 

 ant and that system is being used by 

 substantially all the laundrymen of the 

 country. Asked now how much it costs 

 to wash a pair of socks, he will turn to 

 his books and give figures that extend 

 a considerable distance to the right of 

 the decimal point. 



Ask any florist today how much it 

 costs to produce a flower, if he be a 

 grower, or how much it costs to sell 

 a dollar's worth of flowers, if he be 

 a retailer or wholesaler, and the reply 

 in 999 cases out of 1,000 will be, ' ' How 

 should I knowt" But he is going to 

 find out; he must if he wants to stay in 

 business. 



At St. Louis last August President 

 Charles H. Totty called the attention 

 of the S. A. F. convention to this sub- 

 ject. Mr. Totty 's paper caused the con- 

 vention to authorize a committee to 

 study the subject and report at the 1919 

 meeting at Detroit. 



Only a few weeks 

 ago Otto H. Amling ^^mm^^^^^ 

 (read a paper on the 

 cost of producing flow- 

 ers before the Chicago 

 Florists' Club. It was 

 an exhaustive study of 

 the subject as related 

 to the operation of a 

 greenhouse range. It 

 was printed in The Re- 

 view for November 14. 



System First. 



Let me say here that 

 florists ought not to 

 bother with the impor- 

 tant matter of costs in 

 their establishments 

 until they have at 

 least provided them- 

 selves with proper, rea- 

 sonably accurate and 

 scientific general ac- 

 counting systems, for 

 every cost system that 

 is going to eflfect 

 proper results should 

 be worked through the 

 general books and not 

 independent of them. 

 Therefore, it follows 

 that you can not build 



BY HODGSON JOLLY, C. P. A. 



a proper cost system on an improper set 

 of books. 



Elnowing your costs amounts to know- 

 ing what you are doing. If you don't 

 know what you are doing, you cannot 

 make proper profits. Don't make the 

 mistake of overemphasizing the * * how ' ' 

 to do — get next to the "why." It 

 is one thing to follow blindfolded a 

 set of instructions that will enable 

 you to arrive at your costs, but it is 

 a whole lot more important to under- 

 stand the "why" of these instructions 

 and of the various forms and methods 

 employed. If you don't know the 

 "why," you certainly cannot properly 

 appreciate the real purposes of costs and 

 cost accounting. 



Factors of Cost. 



Final cost of production, like every- 

 thing else, is made up of component 

 factors, and when you get these factors 

 right and in the right place your total 

 costs won't be so hard to determine. 



There are, after all, only two ele- 

 ments in the cost of production — ma- 

 terial and labor, and in the last anal- 

 ysis the commonly called "expense" 

 is nothing more or less than mate- 

 rial and labor, or perhaps only labor. 



Labor, wages or salary is conpensa- 

 tion for effort, either physical or mental. 



THE 

 "HANDLE 



PRICE" EGG 

 WITH CARE" 



SALES^PRJCC 



The Elements of Cost In the Florists' Business. 



on something physical or on something, 

 in principle, and just as this effort 

 is directly or indirectly applied to your 

 product is the determining factor as 

 to whether this kind of expense goes 

 into your prime cost of production or 

 into your overhead. 



At this point it might be well to in- 

 terpolate that many people look to- 

 their books for nothing more than gen- 

 eral financial data, whereas, that is only 

 one kind of information that should be 

 supplied. On this point such a well 

 known business man as W. D. Simmons,, 

 president of the Simmons Hardware 

 Co., St. Louis, says: "Having books 

 give information in regard to receiv- 

 ables and payables is only a minor func- 

 tion of proper accounting." 



On the point of the "why" being 

 more important than the "how" the- 

 well known efficiency pioneer, Harring- 

 ton Emerson, says: "Principles are- 

 made effective through methods. Eec- 

 ords are a principle; accounting is one 

 form of records; costs are a part of 

 accounting. Production costs are only 

 a sub-part of all costs." 



Also on this point it woyld be in 

 order to quote a business man in your 

 own trade, Mr. Amling, who, in his 

 paper before your club said: "I am 

 confident that a thorough knowledge of 

 what it costs to produce each flower to- 

 day will open the eyes of many men in 

 the flower business and 

 ^^^^„^_^ lead them to realize 



that each flower has a 

 value." 



Few Know Costs. 



In regard to the mat- 

 ter of the percentage 

 of business men who- 

 ordinarily would be 

 called smart, Professor 

 William James, the 

 famous psychologist, 

 says : ' ' The average in- 

 dividual develops less 

 than ten per cent of his 

 brain cells." And this 

 fact seems to coincide 

 with the percentage of 

 manufacturing c o n - 

 cerns in the United 

 States that know their 

 costs. The small per- 

 centage of manufac- 

 turers knowing their 

 costs in definite form 

 and shape is the out- 

 come of the fact that 

 for years back the 

 American manufactur- 

 er had it practically 

 his own way as re- 

 gards the price he 



