bookkeeping department according to processes. This may be accomplished by means of monthly time sheets as illustrated by Cut 16. The footings of the different process columns, at the close of a month, should represent the cost of productive labor devoted to each of the processes. Where several kinds of commodities are produced it may be that a different series of processes will be required for each one. In such cases separate monthly time sheets will be required for each commodity.

The "Miscellaneous" column shown in Cut No. 16 is for the purpose of recording the cost of labor devoted to standing shop orders, salaries of superintendent and foremen, lost time, etc. An analysis of this column should be prepared at the close of each month in order to arrive at the figures required in making monthly journal entries Nos. 2 and 3.* The sum total of columns to the left of the "Miscellaneous" column should. represent the cost of productive labor and be used in making monthly journal entry No. 1.* The footing of the "Rent" column represents the aggregate rents chargeable to workmen and should be charged to "Pay Roll" account and credited to

(Size of Original, 28 x 17 inches.)

DEPARTMENT D

SAPPIND

* See Cut No. 18 in Chap. XV

TOTAL

"Maintenance of Real Estate." The footing of the "Light column should be charged to "Pay Roll" and credited to "Manufacturing Expenses."

It is necessary for the bookkeeping department to be furnished with a record of work accomplished under each process. This may be done by means of daily reports from foremen showing, say, the number of pounds milled, grained, filled, capped, dipped, packed, etc. These daily reports should be summarized on sheets in order to secure the requisite monthly totals.

At the close of each month the labor cost-per-pound (or whatever the unit may be) of finished goods is arrived at by means of using the monthly quantities, referred to in the previous paragraph, in connection with the cost of productive labor applicable to each process as shown by the monthly time sheets. Thus, assuming that 200,000 lbs. were milled, 190,000 lbs. grained, 160,000 lbs. filled, 140,000 lbs. capped, dipped and packed; by referring to the monthly time sheet the cost of productive labor devoted respectively to milling, graining, filling, etc., will be found. Divide the cost of milling by 200,000 and the quotient will represent the cost-per-pound of milling. In a like manner the cost-per-pound of graining, filling, etc., should be computed. By adding the cost-per-pound of milling, graining, filling, capping, dipping, and packing, a total costper-pound of finished goods is arrived at, so far as productive labor is concerned. There will, of course, be some milled but not grained, some grained but not filled, and some filled but not capped. The labor expended on these unfinished products is what constitutes the labor cost of goods in process. The quantity and cost of goods milled but not grained, grained but not filled, etc., must be carried forward and used in figuring the costs for the following month under the heading, “In Process Last Month."

§ 120. (2) Materials Used.

All materials used should be reported to the bookkeeping department, and posted to the credit of the proper accounts in the stock ledger. In posting these credits it is advisable to alternate the color of inks each month; i. e., use black ink for even and green ink for odd months. At the close of each month a statement should be compiled from the stock ledger showing the quantity and cost of raw materials used. (Supplies used should be handled as explained in § 116.) The total cost should be used in making monthly journal entry No. 7.*

In order to ascertain the cost-per-pound of raw materials in each pound of finished products, it is necessary to proceed along the lines suggested by the following formula :—

It is necessary to know the raw materials which go into the different processes in order to use the foregoing formula. Very often all materials are used in the first process. In that case it is only necessary to add the cost of materials used during the month to the cost of materials in process at close of the previous month, and deduct from that sum the cost of materials in process at the close of the month. The difference should be the cost of materials represented in the goods finished during the month, and by dividing it by the quantity of goods

See Cut No. 18 in Chap. XV.

actually finished, the cost-per-pound of raw materials in each pound of finished product will be represented by the quotient. § 121. (3) Apportioning Manufacturing Expenses.

The "Manufacturing Expenses" account has been fully dealt with in § 117 of the present volume.

At the close of each month the balance of "Manufacturing Expenses" account must be equitably divided between the goods in process and the goods finished during the month. Assuming that the "Man-hour" method affords the most equitable basis for distributing manufacturing expenses; then the total hours of productive labor for the month forms the basis (denominator). Divide the balance of the "Manufacturing Expenses " account (after all monthly journal entries applicable thereto are posted) by that basis and the quotient, carried to at least four places, will represent the ratio which manufacturing expenses bear to productive time. Multiply the total hours devoted during the month to milling by the quotient, and the result will represent the proportion of manufacturing expenses applicable to that process. Separately multiply the hours devoted to the remaining processes (during the month only) by the quotient referred to, and the sum of the results should equal the balance of the "Manufacturing Expenses" account and be used in making monthly journal entry No. 9.*

In order to properly divide the expenses between goods in process at the close of the month and the goods produced during the month, it will be necessary to use the "results" referred to in the preceding sentence in connection with the formula given on the following page.

The items in the second column represent the results obtained from multiplying the hours devoted to each process during the month by the ratio of expenses to productive time expressed in hours. The items in the third column are arrived.

*See Cut No. 18 in Chap. XV.

at by multiplying the productive time (in hours) applicable to work in process by the ratio. (The productive time devoted to work in process is computed at the time of figuring labor costs.) The footing of the final column should be divided by the total quantity of goods (of a given kind) produced during the month in order to ascertain the cost-per-pound of manufacturing expenses represented in each pound of finished products of a given kind.

This cost-per-pound should be added to the cost-perpound of productive labor (See § 119) and raw materials (See § 120), thus arriving at the total cost-per-pound of a given class of finished goods. Multiply the total cost-perpound by the number of pounds produced during the month in order to arrive at the total cost of a given kind of goods finished. The result should be used in making monthly journal entry No. 10.*

The clerk in charge of the stock ledger will have posted the quantity of each class of goods produced. He should insert the cost-per-unit as soon as it is computed.

*See Cut No. 18 in Chap. XV.