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A number of requests were received by the secretary inquiring as to the possibility of individuals and organizations getting data from your committee for similar work and in order to discuss this phase of the matter thoroughly a meeting was called and held Sept. 3, 1919, at the William Penn hotel, Pittsburgh, and attended by Messrs. A. O. Backert, president of the association; J. Roy Tanner, chairman of your committee; H. J. Koch, C. H. Gale, G. D. Piper and J. P. Jordan of the C. E. Knoeppel Co.

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Report to be Printed After a thorough discussion the following action was taken: "Moved and seconded, that this committee recommend that the cost report be printed and made part of the proceedings of the association, and that a separate volume be published for wider distribution by sale, and that the subscribers who have underwritten the system, and thus performed a valuable service to the industry, dedicate their work to the industry as a guide to better cost keeping, subject to variation depending upon the size of plant and peculiarity of product.”

It was fully understood that all service to subscribers would be carried out as agreed, and Mr. Jordan for C. E. Knoeppel & Co. stated that that company would waive all claims for royalties.

In making this recommendation the committee recognizes that some of its members had ideas slightly at variance in some of the details of allocating overhead to weight, or time, but in general the principles of the system are sound.

It is requested that the American Foundrymen's association take such action as will enable the secretary to take up with the subscribers the question of presenting their work to the association, and also, if necessary, to authorize the inclusion of the system in the proceedings for the year 1920.

We will thus give our work an official standing which can be secured only through the approval of a large technical society, and which will be, we believe, of great value in influencing for uniformity, the work of other bodies along the same lines.

Data on the financial operations of the cost committee are included in the report of the secretary-treasurer.

C. R. MESSINGER,
H. J. Koch,
C. H. GALE,
G. D. Piper,
J. Roy TAXNER, Chairman.

Discussion PRESIDENT A. O. BACKERT.-The cost system question has been before the members of the association for several years. The cost of the system together with the service of one of the cost experts to visit the plants of the subscribing companies ranged from $50 to $250. Now it is felt, and the members of the cost committee are of the opinion that the subscribers to that system have done pioneering work of great value to the foundry industry of the country; that foundrymen generally should install cost systems and that these subscribers might not object to letting the entire foundry industry have the benefit of that cost system. It therefore was recommended by the cost committee that this cost system be printed in the bound volume of the proceedings and also be printed separately in book form so that it may be available to cost clerks, auditors, etc., in that shape. The C. E. Knoeppel Co., which was employed to prepare and install this cost system, raised no objection to it whatever and agreed to waive all royalties. It is the recommendation of this cost committee that the cost system be printed as a part of the bound volume of the proceedings, and also be printed separately. Before doing so, however, it is deemed advisable to ascertain from the subscribers just exactly how they feel about it.

MR. P. H. GARTLETT.-I make that motion.

The motion was seconded by Tom Tannenbaum and carried.

Cost Accounting System-American

Foundry men's Association, Inc.

In presenting this revision of the original bulletin on the cost accounting system no attempt is made to provide for all possible forms used in handling the various lines of routine of the general business operations. It is assumed that all companies have adequate purchasing and commercial accounting systems which would bring all purchases of materials, labor and expense items to certain prescribed ledger accounts, and that adequate invoicing methods are in vogue for sales. Only such documents as are actually necessary for the accounting of the costs will be mentioned in this bulletin in order to simplify the presentation.

Plan of the System The plan of costs shown herewith is simple and is briefly outlined as follows:

The scheme really consists of three main stages: First:

The proper distributing of purchases of material, labor and miscellaneous expense items to certain proper control accounts subject to further accounting by requisition, time cards, etc., to the

proper cost accounts. Second:

(a) The proper accounting of the use of materials, labor, etc., to productive and expense orders, and the transfer of same by summarized monthly journal entries, to the cost control accounts.

(b) Also the transfer from the cost accounts of metal and overhead accounts of the proper cost amounts at predetermined

rates to the work in process account by journal entry. Third:

The compilation of costs of product, which, summarized for the month, credit the work in process and charge sales cost by journal entries.

Predctermined Rates Beiore proceeding further it should be perfectly clearly detined in each mind the meaning of "predetermined rates."

In foundry costing particularly, the feature of predetermined rates is by far the greatest feature. Metal cost must be by pound of metal poured; molding and core burden by percentage on direct labor by each department; finishing cost by

percentage on molding and core direct labor combined; annealing cost by pound on good castings, etc., etc.

But even though we find the actual cost of each of the preceding monthly, it is absolutely improper, unfair and really impossible to use the actual figures of any one month or small group of months in the figuring of costs.

Take, for instance, the cost of melting. Last month we operated smoothly with no repairs of any great amount. This month quite a bit of brick repairs were necessary. Then suppose that next month something went wrong with the blower and we had a very heavy cost of repairs in damages done the cupola. In open-hearth furnaces this feature is very pronounced, as 300 heats may slide along smoothly and then start troubles resulting finally in a complete tear down to the checkers. Or perhaps even the checkers are plugged up.

The same applied in perhaps less extent in all the burden and pound cost accounts.

It is apparent, therefore, that no one month's cost can fairly be taken. Nor even a small group of months. In fact, to be nearest safe, the average of a complete year and even more should be taken as the rate to be used in both estimates and actual costs, for each of the divisions mentioned in the second paragraph.

Bear in mind, however, that the actual cost of each rate is found each month, and in such detail that steps can be taken to study and improve the operating methods in order to make the average or predetermined rate good. In fact, the constant goal should be to beat it and make money by so doing. Arriving at Predetermined Rates, Burdeos and Pound Costs

In melting cost, molding burden-direct labor and all such cost accounts distributed by percentage and pound rates, the basis should be arrived at by using figures of expense and the basis the expense is figured on of at least a year's operation. Of course in starting new, this will be difficult; but this should be the aim.

Machine Hour Rates
In arriving at the predetermined rate per hour of the

molding burden-machine hour, and the coremaking burden-machine hour, a little different procedure holds. Similarly to the preceding accounts, find as closely as possible the maintenance charges covering at least a year of all the machines the time of which is to be charged for; that is, all in the molding department in one group, and all in the core in another

group.

Then arrive at the total power charge for each group. Finally, assemble the proper depreciation for each group. All three of these items will of course be figured by each machine which enters into each group.

Next, compute the total machine hours possible, which is the number of normal working hours of your plant times the number of machines in each group. Then take 85 per cent of the total possible hours in each group as the basis of your rate. Finally divide the total cost for the period by the 85 per cent of total possible hours, thereby arriving at the standard rate to use.

In regular monthly working, it will be best to use the actually employed machine hours as the basis of monthly costs, as shown by the cost statements.

Cost Plan in Greater Detail In more detail, the cost scheme deals with the subject as follows: The headings shown being those which appear on the cost sheet whereon the cost of a casting or classes figured. Direct Labor is charged to production orders which represent either

individual patterns or classes of work. This labor consists only of that which is directly chargeable to the product manufactured. All other labor entering into pound or percentage rates is classed

as indirect labor. Metal Cost is assembled monthly in a melting cost account. This

account is credited with the actual metal poured at the predetermined rate, the balance showing whether operating over or under

the proper rate. Molding Burden-Direct labor is assembled monthly in the mold

ing burden account, which account is credited at close of monthi with the amount of burden represented by the predetermined percentage of the actual direct molding labor for the month. The balance indicates whether operating over or under the required

rate.

Molding Burden-Machine Hour is assembled monthly in the mold

ing burden-machine hour account, and is credited at close of month with the amount represented by the actual number of machine hours consumed for its month on productive work at the predetermined rate per hour. This predetermined rate is designed to be figured on the basis of a long average cost of items sho

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