210 REPORT OF THE FORESTRY COMMITTEE 



gets have been long in vogue with the foresters of Europe, and it is surprising 

 that so few lumbermen in this country have adopted this means of promoting 

 greater efficiency in their business. 



The value of the budget lies in its anticipation of future demands for cash to 

 carry on the business. In addition, it posts the operator on the period when these 

 funds will be needed, and he is thus enabled to secure financial loans to better 

 advantage, to buy supplies in the most favorable markets, and to secure labor 

 when required because of the knowledge possessed some months in advance of 

 the needs of the business. 



The budget is in reality a statement of the work to be performed during a 

 given period, preferably a logging season in the North or twelve months in the 

 South, and the supplies, equipment, and funds necessary to carry out the projected 

 program. 



The budget is usually composed of various units prepared by the foremen 

 and others in charge of woods work. These units are compiled in the main office 

 for the information of the General Manager, the purchasing department, and 

 any others directly concerned. The budget in detail should show when and where 

 any work is to be performed, the number of men and animals required, the 

 amount and character of supplies needed, and the estimated cost of each item. 



A budget is a potent factor in reducing costs of operation, because a fore- 

 man in estimating on a given piece of work will be apt to place it as low as is con- 

 sistent with good work, and once he has committed himself he will be diligent in 

 attempting to maintain his reputation by not exceeding the ^estimate. In case the 

 demands for equipment, supplies and labor, or other costs exceed those given in 

 the budget the foreman can be called upon for an explanation of the discrepancy. 

 A comparison between the budget estimate and the actual cost of performing 

 work furnishes a basis for determining what figures in the cost sheet are in excess 

 of those which would be incurred under efficient management, thereby eliminating 

 a factor of uncertainty which many operations now possess. 



The use of a budget not only brings economy in the purchase of supplies and 

 equipment, but also leads to greater efficiency in the actual performance of logging 

 work. It is regarded as an absolute essential where a forest is placed under 

 proper rrianagement. 



Accounting. — An essential feature of the records of every lumber operation 

 is the collection and tabulation of data on costs and methods of work actually per- 

 formed. 



Cost figures are vital to the conduct of any lumber operation, no matter how 

 limited the output; hence this branch of records is kept in some form or other. 

 There is a wide discrepancy in the accounting methods, due both to the peculiari- 

 ties of individual operations and often to a lack of understanding of the prin- 

 ciples underlying proper accounting. Many of the larger operators have cost-keep- 

 ing systems which are based on sound accounting principles, but these are in the 

 minority. 



There is such a wide divergence in the methods employed and in the items 

 which enter into the cost-keeping sheets and in the handling of depreciation and 



