10 



The Florists' Review 



December 26, 1918. 



charged for his product, and when his 

 costs mounted up so as to make the 

 margin of profit too small, he merely 

 went out and boosted his sales price. 

 Competition, however, stepped in and, 

 as is always the result, the margin of 

 profit on sales began to decrease. The 

 manufacturer, therefore, had to look 

 to his cost of production, instead of to 

 his sales price, and was gradually forced 

 to realize the importance and necessity 

 of proper production costs. 



••The Sales Price Egg." 



In this connection, and perhaps more 

 particularly to draw attention to the 

 fact that your margin of profit is de- 

 pendent on your ability to keep down 

 the price of your production and selling 

 costs, I have gotten up a chart, en- 

 titled "The Sales Price Egg," which 

 is shown in the accompanying illustra- 

 tion. You will notice in the chart 

 that the demarcation line between the 

 production overhead and the general 

 overhead is a dotted line. This is in- 

 tended to bring out the point that many 

 manufacturers and producers lump the 

 production and general overhead to- 

 gether, which, though not scientifically 

 correct, is so shown in the chart. Again, 

 in the sales overhead, or, as it is usually 

 called," selling expense," there are in- 

 cluded "bad debts" and "credit serv- 

 ice," but these, of course, might be 

 considered by some as belonging more 

 to the "general overhead" than to the 

 "sales overhead." However, there is 

 no contention on my part that what is 

 included is the last say-so in what can 

 or should be included under the differ- 

 ent division, but each item is put in as 

 being indicative of what might or 

 should be in the different divisions. 



The science of cost-finding or cost- 

 accounting is segregating the different 

 material, labor and expense details 

 directly or indirectly into their proper 

 classifications of production and selling, 

 and combining them thereafter in ac- 

 cordance with the actual production 

 facts into total production and selling 

 costs. 



Segregating the Costs. 



It can be here noted that I have seg- 

 regated the selling overhead or ex- 

 pense apart and distinct from the pro- 

 duction and general overheads and this 

 is as it should be, because if you are 

 going to get the proper control, both 

 physical and human, that you should 

 get from your costs, you should segre- 

 gate them, and the steps in proper costs 

 are: 



First. Get your prime cost to pro- 

 duce. 



Second. Add your additional cost 

 to finished production, and to the total 

 of these — 



Third. Add your selling costs or sell- 

 ing expense. 



In regard to the experience of other 

 trades in the matter of standardized cost 

 systems, a frequent cause of dissatisfac- 

 tion has been the attempt on the part of 

 so many of the members of these dif- 

 ferent trade associations to apply the 

 so-called "standard system" without 

 modification or alteration to their own 

 particular businesses. No cost system, 

 even though gotten up specifically for 

 a certain trade and even though worthy 

 of the term "excellent," is so compre- 

 hensive and perfect as to be applicable 

 without change or modification to every 

 condition and requirement of the differ- 

 ent businossos in that trade. Every 



cost system must be properly applied 

 and molded to the conditions and re- 

 quirements of the individual businesses, 

 •in order to effect the proper purposes 

 and results. This has been borne out 

 conclusively in the experience of the 

 printers, clothiers, bakers, foundrymen 

 and others. Horse sense and judgment 

 are necessary in addition to technical 

 knowledge in the application and 

 molding of any standard system, other- 

 wise little or no good and perhaps even 

 harm will result. 



Wien It Is Worth While. 



Another point of importance is the 

 determination of how far to go in your 

 cost-finding. Volume of production usu- 

 ally coincides with volume of sales and 

 determines to a great extent whether 



NOTICE 



To those who want things 

 printed in 



Because the New Year's holiday falls 

 on Wednesday, the day the paper usually 

 is printed, it will be necessary to go to 

 press next week 



ONE DAY EARLY 



TUESDAY 



with the issue for January 2. 

 Get YoiR Matter in Monday 



or not cost-finding on any phase of 

 production or on any item of production 

 is worth while. It is logical that if it 

 costs more in clerk and other hire and 

 expense to ascertain what the article 

 or unit costs to produce, there is no 

 use or sense in determining its cost. 



All costs and all in costs are material 

 and labor, and these are either direct 

 or indirect to production. 



Direct material goes to prime cost of 

 product. 



Direct labor goes to prime cost of 

 product. 



Indirect material goes to overhead 

 cost of product. 



Indirect labor goes to overhead cost 

 of ptoduct. 



The purpose of costs or cost-finding is 

 control, not only of the factors in costs 

 and thereby of profits, but also of 

 wastes of time, material and human 

 energy. Here one eflBciency expert 



says: 



'If we know what standard 



costs ought to be and what actual costs 

 are, we can dete)rmitie efficiencies." 

 And this phase of cost-finding should 

 never be lost sight of. Your friend, 

 Mr. Amling, said pertinently in his 

 paper that "it costs money to grow 

 every inch of stem on a rose, ' ' and that 

 suggests a little thought on the subject 

 of the units of cost. 



How to Determine Selling Price. 



Units of cost are usually determined 

 with reference to the basis on which 

 the finished product is sold, as for in- 

 stance: (a) per flower j (aa) per number 



of flowers; (b) per plant (non-flower- 

 ing)} (tb) per number of plants; (c) on 

 other base, as per leaves, as with palms, 

 etc. 



This matter of unit, of course, opens 

 the field for an interesting and elaborate 

 discussion as to the basis for determin- 

 ing the cost, and many articles could be 

 written on that phase of the subject 

 alone. I understand that the square 

 foot of bench space cost, in the case 

 of growers, has, more or less, been ten- 

 tatively accepted as the proper one, but 

 a final decision could only be reached 

 in such a matter by a careful and com- 

 mon sense analysis of the factors in the 

 case. Although I have not had the 

 time to devote to this interesting and 

 important phase of the question of costs 

 in the florists' trade, I would suggest 

 that there may possibly be others 

 just as sane and practical as the one 

 mentioned. 



Separate Types of Accounting. 



In closing, it would be my suggestion, 

 if the florists as a trade association 

 intend going further into this matter 

 of production costs, that thought be 

 given to the building up of separate 

 types of standardized cost systems for 

 the producer, wholesaler and retailer. 

 For it should not be thought that there 

 can be only one cost system and that 

 for the producer. Every business has 

 its costs, and the type of proper cost 

 system for the grower would necessar- 

 ily have considerable detail in it that 

 would be of no interest and not appli- 

 cable to the wholesaler and retailer, 

 and vice versa. 



Another equally important matter 

 that ought to be considered by the flo- 

 rists would be the terminology to be 

 used, or in other words, the establish- 

 ment of the proper names for every 

 production and overhead cost item, as 

 much useless discussion results from the 

 misunderstanding between people aris- 

 ing out of the use of or abuse of the 

 proper terms or names. 



PEOPAGATION OF OUTTINaS. 



Please tell me how to propagate weep- 

 ing lantanas, plumbagos, pot hibiscus 

 and jasmines. I can root a great many 

 other plants, but fail with these. 



E. E. B.— Tex. 



Lantanas, Plumbago capensis and 

 rosea, hibiscus and jasmines all propa- 

 gate easily from soft-wood cuttings, es- 

 pecially such as are taken off with a 

 heel, if the cuttings are inserted in a 

 cutting bench where there is a good, 

 steady bottom heat. The jasmines, 

 hibiscus and plumbago may be rooted 

 also from more mature wood, but such 

 cuttings are much slower in rooting. 

 Given a good bottom heat and care in 

 keeping the cuttings moist, you sho\ild 

 have no trouble in rooting any of the 

 four plants named. C. W. 



TIM'S TIMELY TIP. 



T. E. Waters, manager of the supply 

 department of the Poehlmann Bros. Co., 

 Chicago, was listening to the complaint 

 of a customer: 



' ' I have been using a lot of artificial 

 flowers since the^re^ ones became so 

 scarce, and I don't like to," the cob- 

 tomer was telling "Tim." 



"What's the reason!" 



"They last too long." 



"Put a time bomb in each one," was 

 Tim's timely tip. 



