BY D. C. EGGLESTON.

The organization of manufacturing plants is designed to distribute responsibility between the managers of the executive, financial, sales, and manufacturing divisions. The responsibility of the latter division is subdivided between the heads of the output, material, labor, and clerical branches of the factory.

The first division of the output department is that issuing shop orders. These are made in manifold, and copies are sent to the departments requiring a record of all shop orders that are issued. The second division traces shop orders through the shop. Their copy of the order is used in posting the shop tracing sheet, one of which is reserved for each order issued. The progress of each order is then recorded on the sheet from coupons of destination tickets, which the shop clerks attach to the order when it is to be moved. The ticket and coupon each bear the date, order number, department sending material, and destination, as shown in Form I.

If a coupon of a destination ticket is not soon received showing that the balance has been forwarded, the shop tracing clerk assigned that order must try to have the material located. If it cannot be found, he notifies the shop order department, and another order is issued to replace the parts lost. The last division of the output department is the inspection branch, the work of which is divided according to the classes of material to be inspected. That raw material may be as wanted when required, it is necessary for the raw material inspector to pass on it before it is delivered to the storerooms. To facilitate the work of assemFORM 2.

bling parts, the work in process through the factory requires inspection. Only rigid methods of inspection by the process inspector can insure interchangeability of parts, which is carried as far as possible by American manufacturers. Before shipping an order the finished material inspector must put his stamp of approval on the shipping ticket, a duplicate of which is sent the shop tracing department as a notification that the order is complete. Thus the responsibility for issuing shop orders, tracing them through the shop, and inspecting them is placed upon the

are adopted. A copy of the foreman's production order is made plete unless adequate methods of ordering and storing material Material is such an important item. that no cost system is com

deliveries on an order. assistant shop superintendent. Lastly, a shop tracing sheet is sent to the shop cost department as their voucher for the number of output department, which is usually under the direction of the

Quantity
Req.

USED

Date

Order Quantity
No. Drawn

Date

Order
No.

Quantity

on Hand

Date

3-3-06 51,100

500

3,500

1902

Quantity

on a stock slip (Form 2) and sent to the storeroom. Foremen draw material by presenting a requisition duly signed with their order. The storekeeper refers to his file of stock slips to see if the foreman is entitled to material. If so, he enters the amount drawn on the stock slip and forwards the requisition for material to the material order department to use in posting a record of material drawn from stock on their records. Orders on the millwright, house carpenter, and house wireman for doing work about the factory are issued on running expense orders. With this form of order no stock slip is issued, the material drawn being entered on the order itself, which is forwarded to the shop cost department monthly. Then a new set of running expense orders are issued. All clerical work connected with keeping stock

records is centralized in the office under the direction of the material order department. For each kind of material carried a record card (Form 3) is reserved. Provision is made for entering the amount of material ordered, received, and drawn from stock. Amounts ordered, received, and delivered are entered from a duplicate of the purchase requisition, the record of receipts from the receiving department, and the foreman's requisition for material, respectively. Reference to Form 3 shows that 4,000 lbs. of hard brass were ordered on February 10 and received March 1. Two days later 500 lbs. were drawn from stock, leaving a balance of 3,500 lbs. When the minimum limit of 300 lbs. is reached, another order for material must be issued.

Labor is an important feature in any system of factory cost accounting. Where piece and premium work prevail, the amount chargeable to each job is easily determined. When receiving an order, the foreman draws material as explained and assigns the work by making out an assignment card (Form 4), on which he records the date, order number, and operator's name. These are filed by operators' names, and daily, when the time tickets are made out, the file is referred to for the job number on which the operator is working. Piece and premium workers require an entry of the number of parts made before forwarding them to the pay-roll department. Day workers, of course, do not. After posting the pay rolls, all time tickets are sent to the labor cost department, where they are filed behind guide cards by order number. When the job has been completed the tickets are removed, the time on each extended, and a summary made. This gives the productive labor charge on the job.

Material and labor are often spoken of as prime costs, and the methods of dealing with them are better understood than those of dealing with the third division, often called indirect expense. Several subsidiary ledgers are required in cost accounting, which are represented by controlling accounts in the general ledger. One ledger shows in detail the charges to the fixed expenses, power, rent, administration, tools, sundry and material divisions of the shop expense account. The main subdivisions of each account for which expenditures are likely to be made are best outlined and a number assigned to each. Thus, under the head of the rent expense division, we have depreciation, insurance, taxes, changes, and repairs of the building, and rent fixtures, sweeping, cleaning, and supplies. In addition a "sundry" division should be provided in case all items of expense are not provided for. The power, sundry, tools, administration, and material expense divisions are treated in the same way.