it necessary to have accurate records of production, since the pay
of the worker is governed by the number of units of production.
It has already been stated, that to obtain the exact cost per unit
of production, time records must be kept on piece work. It is not,
however, absolutely necessary that the time be recorded for each
separate job or unit of production. The necessary requirement is that
the production records shall be so kept that they can be checked as to
time──that the time required for a given number of units of production
can be obtained, or that the units of production during a stated time
can be definitely known.
[Illustration: Fig. 26. Weekly Time Records for Piece Workers]
[Illustration: Fig. 27. Production Record of a Gang of Piece Workers]
Piece rates are applied to many distinct classes of work, each of
which necessitates a slightly different system of records. One of the
industries in which piece rates are largely used, is the manufacture of
garments of different classes. In this industry, each garment or lot
of garments passes through several operations, each operation being
performed by a different operator. Since practically all operations are
on a piece─rate basis, it is necessary to obtain a record of the name
or number of each operator.
[Illustration: Fig. 28. Individual Time Record Card Used with the
Calculagraph]
[Illustration: Fig. 29. Daily Record of Piece Work]
A form for a record of operations in an underwear mill is shown in Fig.
25. This is in the form of a shipping tag with particulars of the order
at the top, followed by a list of the operations. As fast as the goods
are cut, they are tied in bundles of one dozen garments. The tag is
then attached, the cutters' names or numbers are entered on the lines
opposite their operations, and the bundle is delivered to a storeroom
located conveniently to the machines.
[Illustration: Fig. 30. Record of Unfinished Piece Work]
[Illustration: Fig. 31. Production Record for Determining Piece Rates]
In the mill where this particular system is in operation, each
operator delivers her work to the storeroom and receives more work as
needed──always writing her name on the tag. When the work is received
in the storeroom, a clerk records the last operation on the operator's
time card, Fig. 26. One of these cards is used for each operator and
accommodates the record of work for an entire week. Provision is made
in the column at the left for a record of the kind of work, while
the record of dozens finished each day is shown in the proper daily
columns. At the end of the week, when extensions have been made, this
card shows the amount of wages due, the different kinds of work done,
and the quantities finished. In connection with this, the usual clock
record of total time is kept, and a comparison of the piece work and
clock records will show whether or not the operator is maintaining
standard time on the different classes of work.
[Illustration: Fig. 32. Sheet for a Record of Total Time]
In the manufacture of certain classes of cans, some of the operations
are paid for on a piece─rate basis; but payment is made on the basis of
the production of a crew. The operation of crimping tin ends on certain
cans, requires a crimper and several helpers, the latter preparing the
cans for the operation. For this operation, the pay of all members
of the crew is based on the number of cans finished; that is, if the
number finished by a crew consisting of one crimper and four helpers
is 2,000, the crimper will be paid for that number, while the helpers
will each be paid for 500. The form used for a record of production on
this operation is shown in Fig. 27. This is the assembled record, the
individual time records being made mechanically on a card, Fig. 28.
[Illustration: Fig. 33. Combined Piece Work and Time Record for
Pay─Roll Purposes]
On the operation above referred to, the speed of the helpers is limited
to the speed of the machine, but if three helpers instead of four can
do the work, the pay of each will be increased correspondingly. In the
operations handled by crews, there is nothing to limit production. The
result is that each member of the crew is obliged to maintain the pace
set by the most speedy member, which reduces the cost of production and
enables all members of the crew to earn a higher average wage.
A form of piece─work record, used in a factory where employes are
expected to keep their own time, is shown in Fig. 29. This ticket is
filled in by the employe, _O. K.'d_ by the foreman after inspection of
the work, and forwarded to the cost department. All unfinished piece
work is reported on the form shown in Fig. 30. This report enables
the cost department to determine the actual time of all piece─work
operations.
Before piece rates can be established for new work, it is necessary to
ascertain the average time required for the different operations. This
necessitates a very accurate record of production of employes working
on day wage rates, and the record must represent the average rate of
production of all employes, rather than the rate maintained by a few
of the most skillful. A form used in one factory for such a record
is shown in Fig. 31. When new work is started, one of these cards is
filled in for each employe assigned to the work, and a record kept of
each operation. When the records have been kept for a sufficient length
of time to obtain an average, the records of all employes for the same
operation are combined and, on the average thus obtained, the piece
rates are established.
PAYING EMPLOYES
=17.= The time records of all employes, no matter how kept, must be
assembled for the purpose of making up the pay─roll. Special forms of
time sheets or pay─roll records are designed to meet the requirements
of different classes of business. Several such forms are shown in other
papers in this series; others are illustrated herein.
A conventional form of time sheet is shown in Fig. 32. The names are
grouped on this sheet by departments, and opposite each man's name is
his number. The daily time records are kept for a period of one week,
then totaled, and the amount of wages extended in the last column.
Fig. 33 shows a form of time sheet intended for a tabulation of both
the clock record and job time. The bringing together of the total time
records (as shown by the clock) and the production time records (as
shown by the job time cards) is of very great importance in connection
with any system of cost accounting. One must be checked against the
other, for unless all of the time for which the employe is paid is
accounted for in the cost records, cost figures will be incorrect.
If the two records do not agree, even though the employe is paid for
the time shown by his clock record, the discrepancy should be adjusted.
Theoretically, every minute of a man's time should be accounted for by
his time cards and, when conditions permit, he should be paid only for
the time so accounted for. This rule should not be so rigidly enforced,
however, as to encourage a man in padding the time on individual jobs
to reconcile the total for the day with his clock record; it is far
better to have a few minutes unaccounted for. When a foreman fails to
have work ready, he should give the workman an idle or indirect labor
card, but the man should be impressed with the fact that accurate
records are kept of his time on every job, and that all lost time must
be either reported on an indirect labor card or left unreported.
The cost of time shown on indirect labor cards, and of all time
unaccounted for, should be charged to the department under some such
caption as _Department Waste_, never to the specific jobs on which the
man has worked. Time wasted between jobs or on account of a breakdown
or other unusual occurrence does not affect the legitimate time in
which a particular job should be done. It is rather a legitimate charge
against the efficiency of the department, and the aggregate of all such
inefficiency charges should be applied as an added burden to all of the
jobs in the department during the month.
Costs obtained, after adding this inefficiency burden, may be
considered the actual costs for the month, but cannot be safely used
as standard. Standard costs are the costs obtained under perfect
conditions──when the department, shop, or plant is running full time
at full capacity; when all of the time of every employe is accounted
for by his job time cards; when there is no wasted time or unusual
expense. While standard costs may not be attained──probably never will
be──this should be the goal, to reach which, managers, engineers,
superintendents, foremen, and workmen should strive constantly. As a
matter of record, therefore, to show what obstacles must be overcome
before the ideal is reached, the inefficiency burden should be added as
a separate item after all other items of cost have been computed.
As an example of the effect of the application of this principle
of considering efficiency in figuring costs, we will consider an
imaginary case. We will suppose that, in a certain month, the
pay─roll for direct or productive labor in our shop is $4,000; that
40 completed machines──identical in every respect──are produced; that
every minute of the time of every productive employe is accounted
for by his productive job cards. This gives a labor cost of $100 per
machine. During the next month the same men are employed at the same
cost──$4,000──but owing to an unusual breakdown, 2½% of the time of
these men is wasted; they are idle while the breakdown is repaired, and
but 39 machines are produced.
If the $4,000 wages paid is charged as direct or productive labor it
gives a cost of $102.56 each──an increase in cost with nothing in the
figures that shows the cause. If, however, an inefficiency charge of
$100 (2½% of $4,000) or $2.56 per machine is added as a separate
item, it is seen at once that here is an unusual item of expense. The
amount ($2.56 per machine) is included in the final costs, but in the
right place; there is no cause for confusion on account of an apparent,
but not real, increase in the productive labor cost. If the cost of
$100 per machine obtained during the preceding month is standard
for productive labor, it still is the attainable standard; the fact
of an unusual expense has in no way affected the legitimate cost of
productive labor.
Another great advantage in presenting the labor cost statistics in this
manner is that inefficiencies are shown in an understandable form.
The fact that indirect labor is increased, say 2%, might occasion no
comment; but if an inefficiency charge of even 1% is shown, it calls
for immediate investigation.
The establishment of standard or efficiency labor costs means
predetermined costs. This is a radical departure from established
custom; on its face, contrary to recognized accounting practice;
in results, wonderfully efficient. To determine standards in men,
material, and machines is a function of the engineer; the recording
of facts──the actual cost──is the function of the comptroller or
accountant. The two must work together. Properly prepared accounts,
showing actual costs with the items that make them segregated, show the
engineer how far short of possible standards the plant is running──the
extent of the inefficiency.
[Illustration: Fig. 34. Record Card for Applicants for Employment]
RECORDS OF EMPLOYES
=18.= In connection with the different time records designed to record
hours of service and units of production, there should be a personal
record of employes; and the more intimately personal it can be made,
the more valuable will the record become.
[Illustration: A BIRD'S─EYE VIEW OF THE PLANT OF STUDEBAKER BROS.
MANUFACTURING CO., SOUTH BEND, IND.]
Napoleon, it has been claimed, could call by name every man in his
armies, but, however great value may have been placed on such a memory
feat, the manager of the present─day great business organization, who
can call by name each of his employes, is an exception.
[Illustration: Fig. 35. Card for Record of Applicants]
[Illustration: Fig. 36. Card for Record of Employes]
It is not necessary that he should do so, for, as business is now
specialized and departmentized, he needs to know only the results
of the labor of those employes. By this is not meant that he should
not take an interest in the personality of his organization; on the
contrary, he should be very much interested, but he can be relieved
from burdening his mind with details by means of simple records.
Somewhere in the office there should be as complete a personal
record of each employe as is possible to obtain. This record should
include applicants, employes, and past employes, and it should be
the duty of some person or department to maintain the record. In the
smaller establishments, employes' records should be in charge of
the chief accountant, office manager, or superintendent; in larger
establishments, the employment department will keep these records.
[Illustration: Fig. 37. Card Showing Complete Record of an Employe]
=19. Application Card.= Fig. 34 shows a simple form of application card
to be filled out for every applicant who is not hired immediately,
but whose application receives favorable consideration. This card is
headed with the name of the position applied for, or the trade of the
applicant. Following this is the name and address, and such information
about the applicant as may be considered of special value.
These cards are filed in a regulation card index drawer and indexed
under the trade or position applied for. The index cards are headed
with the names of the trades employed, the departments, or such other
designations as may be best suited to the business. For instance, one
index might be headed _Machinists_. Back of this index the cards of all
applicants for positions as machinists will be filed in alphabetical
order.
A form of application card which provides for more detailed information
along certain lines is shown in Fig. 35. While this card is headed with
the name of the employe, it is filed under the trade, as described for
Fig. 34.
The value of these application records is apparent. When a man is
needed, reference to this file will show who has applied and assist in
getting a man quickly.
=20. Employe's Card.= One form of employe's card is illustrated by
Fig. 36. This card is filed as soon as a man is engaged. At the head
of the card is the name of the employe, the department to which he is
assigned, and his clock number. Following this is the address and other
essential information. Space is also provided for a record of changes
in wages, including both dates and rates. At the bottom of the card,
space is left for notes on the record of the employe, which can be
continued on the back of the card. The final record on this card is the
date the employe quits, or is discharged, with reasons.
[Illustration: Fig. 38. Card Record of a Past Employe]
Another form of employe's card is shown in Fig. 37. The special feature
of this card is that, for each increase in wages, the reason and name
of the person granting the increase is noted.
The cards of present employes are filed alphabetically by name.
However, in very large establishments, it is advisable to subdivide
them by departments and arrange the cards of all employes in the
department in alphabetical order. It is seldom necessary to arrange
the cards by trades for the reason that the names are, as a rule, so
classified on the pay─roll records.
The employe's record proves valuable in many ways. If, for any reason,
an employe is away from his work, and it is desired to communicate with
him, the address is quickly found; in case of an accident, resulting
in injury to the employe, the address is very convenient. Again,
when a man is wanted for a position a little above that occupied by
the average employe, it is best, if possible, to select a man from
the present employes. Whether the position be that of a gang boss,
a foreman, or the head of a department, a condensed record of past
performance, supplementing the personal observations of his superiors,
will be found of considerable assistance in selecting the right man.
Many other advantages might be named, but those given should be
sufficient to demonstrate the advisability of maintaining these records.
=21. Past Employe's Card.= In some respects, a record of past employes
is as important as the record of applicants and present employes. When
more men are needed, it is natural to suppose that past employes,
whose services were satisfactory, will be specially desirable. On the
contrary, a past employe who has been discharged, or whose work was
unsatisfactory, is unlikely to be desirable.
Any record that will show who the past employes are, why they left,
and their past record, will therefore be of value. Such a record
is provided by the card illustrated in Fig. 38. When an employe
leaves, for any reason, one of these cards is filled in and filed
alphabetically. At the same time, the employe's card is transferred
to another section of the file, and indexed under the name of the
department, or the trade or class of employment.
These cards furnish a very complete record of employes, past, present,
and future. If the number is small, all can be filed in one drawer,
with separate indexes to segregate them into classes. Or a large
cabinet, with one or more drawers for each class of records, may be
required, but, in any event, the records are complete.
MANUFACTURING ORDERS
=22.= One of the principles that must be kept in mind when installing a
system of any description is that provision must be made for recording
every detail of the work intended to be cared for by the system. While
this holds true in respect to the systems in every other department of
a business, it is of special importance in the manufacturing branch.
Accurate costs are out of the question unless every detail of the
operations of the plant is properly recorded.
Experience has shown but one method that will insure accurate
records, and that method is to manufacture all goods on definite
orders and to charge all work not applied to a specific manufacturing
order, to expense or operating accounts. The receipt of an order to
manufacture before starting the work, is of the same importance to the
superintendent as that the commercial department shall receive an order
from the customer before shipping goods.
Few managers will accept verbal orders for the manufacture of expensive
goods, without asking for a confirmation in writing. When those
orders are transmitted to the manufacturing department, it is just as
important that they shall be in writing.
Manufacturing orders are of two classes: general orders to the
superintendent to manufacture a certain quantity of goods, and specific
orders to shop foremen to do some part of the work. For convenience,
these orders will be referred to in this discussion as _Production_
orders and _Shop_ orders.
=23. Production Orders.= The production order is the written
instructions to the superintendent to manufacture certain goods. It
is his authority to secure the necessary material, to employ the
required number of men, and to convert that material and labor into the
finished product. The production order may call for the manufacture of
the quantity of goods of a certain type required to fill one or more
customers' orders; the manufacture of a certain quantity of goods to be
placed in stock, from which to fill future orders; the conversion of a
definite quantity of raw material into finished products; or even the
manufacture of an indefinite quantity of raw material into an equally
indefinite quantity of the finished product, but within a definite
period of time.
Usually the production orders of one factory will be confined to
one class, though there are some exceptions. In the first class, we
find shops manufacturing special machinery, jobbing foundries, and
mills manufacturing underwear and hosiery. In the latter business the
goods are sold in advance, from samples, and only the quantities or
particular styles required to fill orders are manufactured.
The second class includes furniture factories, typewriter factories,
the manufacture of tools, and numberless similar industries in which a
stock of standard goods is manufactured for future sale.
An example of the third class is found in a harness factory. In this
business, a certain number of sides of leather are issued to the
cutting room to be cut. Since the leather is not uniform in weight
or texture, it is not possible to cut an entire side of leather into
pieces of the same size, or the same parts of a harness──as lines or
traces. The cutter must use his best judgment, so cutting the leather
that it will produce the largest possible volume of usable stock, with
the least waste. The definite factor is the side of leather which is to
be converted into an indefinite quantity of finished, or semi─finished
product.
The last class is illustrated in the manufacture of salt. The
brine──raw material──is pumped from the wells into storage tanks,
from which it is drawn into evaporating pans or grainers. An order
may be issued to make what is known as _common fine salt_ in three of
these evaporators. Evaporating processes are influenced by atmospheric
conditions──the same heat will evaporate the brine much more rapidly
one day than another. Also, the brine is of different degrees of
strength──the same quantity does not always contain the same amount of
salt. The only definite factor is time──an indefinite quantity of brine
is converted, in a given time, into an indefinite quantity of salt and,
it might be added, of an indefinite quality.
When all these conditions are considered, together with the fact
that each manufacturer has his individual methods of conducting the
business──methods probably different from those of his competitors in
the same line──it will be seen that the variety of forms of production
orders is almost without number. But the important thing is to have an
order of some kind──to provide a record.
If there is one essential feature to be incorporated in the production
order, it can be expressed in two words──definite instructions. The
order should be made perfectly clear, leaving no room for doubt, as to
what is desired. When No. 3 dining─room chairs are wanted, the order
should state the fact very clearly, and not read _chairs_, leaving the
superintendent to guess the style and size.
[Illustration: Fig. 39. Production Order to Superintendent]
[Illustration: Fig. 40. Production Order Which is an Exact Copy of the
Customer's Order]
The form of the production order need not be complicated; indeed, a
simple form will serve the purpose much better, an illustration of
which is shown in Fig. 39. The heading of this order shows the number
and date, with instructions to the superintendent to carry out the
work as specified. The body of the order is blank, providing space for
entering such details as may be necessary. The blank at the bottom,
which is filled in by the superintendent's clerk, shows the date
received, date started, the shop order number, and the date finished.
[Illustration: Fig. 41. Sub─production or Shop Order]
This form is suitable for almost any kind of business or class of
order. The production order should always be made in duplicate, a copy
to be kept in the office. The office copy will be used to follow up the
manufacturing order.
In many lines of business, goods are manufactured only as required
to fill customers' orders. The order to manufacture should, in such
cases, be an exact copy of the customer's order as entered. With the
modern method of entering all orders in manifold──with a copy for each
record required──one blank should be included for the factory, this
becoming the production order. A form of this kind is shown in Fig. 40.
This is an exact copy of the order as entered, the instructions in the
heading taking the place of the name and address of the manufacturer.
The particulars include the number, date received, and date to be
shipped. The body of the order contains the necessary instructions; in
the column at the extreme left──quantity ordered, quantity shipped,
size, and description. This is one of a set of blanks that include the
invoice, office copy, cost department copy, and copy for the shipping
department.