PART II. 

 COST KEEPING FOR HIGHWAY WORK. 



ESSENTIALS OF A COST SYSTEM. 



Certain fundamental principles must be followed to make any- 

 cost system successful. This applies to road costs as well as to fac- 

 tory costs. Any cost-keeping system to be successful must be (1) 

 reliable, (2) simple, (3) immediate, (4) flexible, and (5) relatively 

 inexpensive. 



(1) Reliability is of paramount importance. If the data collected 

 are not reliable, all records based upon them of course will be mis- 

 leading and the results dangerous. Accuracy is desirable, but this 

 need not be carried beyond the practical limits adopted for measur- 

 ing the units of materials expended and the units of work accom- 

 plished. 



(2) If simplicity be not maintained the purpose of the system will 

 be defeated. Involved and complex forms are confusing to the 

 recording officials, difficult to compile for study and analysis, and 

 apt to be inaccurate and a useless expense. 



(3) To be effective, the cost records must be susceptible of im- 

 mediate analysis and must reach the officials responsible for the 

 economic progress of the work in time to be of use. If a week or 

 10 days must elapse before wasteful methods and incompetency 

 are discovered the information is past history and it may be too late 

 to try other methods which might rectify the detrimental condition. 



(4) Flexibility is very desirable. The system must be elastic 

 enough to provide for the recording of all classes of work, irrespec- 

 tive of the size of the project, without any material change in the 

 prescribed forms. 



(5) Finally, the system must be relatively inexpensive. The 

 cost of determining cost must be reduced to a minimum. If expense 

 of obtaining cost records to point out the way to efficiency is not 

 much below the saving effected, they have no just claim to a place 

 in any plan of management. 



CLASSIFICATION OF EXPENDITURES. 



The first problem in developing a cost-keeping system for highway 

 work is to devise a general classification of expenditures that will 

 conform to accounts appearing upon the ledger of the organization; 

 that is, at the outset the cost keeper's records must tie into the book- 



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