NATIONAL ASSOCIATIONof

COST ACCOUNTANTSAffiliated With The Canadian Society

of Cost Accountants

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Official Publications

Vol. IV July 2, 1923 No. 20

Radio Educational Cam-paign

B U S H T E R M I N A L B U I L D I N G130 WEST 42nd STREET, NEW YORK

N A T I O N A L A S S O C IA T IO N OFC O S T A C C O U N T A N T S

Affiliated wi th T h e Canadian Society of Cost Accou nta nt s

Official Publications

Vol. IV, No. 20 July 2, 1923

Radio Educa tional Camp aign

Broadcastings ByNAT IONAL ASSOCIATION OF COST ACCOUNTANTS

BUSH TERMINAL BUILDING1 3 0 W ES T 4 2 n d S T RE ET , N E W Y O R K C IT Y

The National Association of Cost Account-ants does not stand sponsor for viewsexpressed by the writers of articles issuedas Publications. The object of the OfficialPublications of the Association is to placebefore the members ideas which it is hopedmay prove interesting and suggestive.The articles will cover a wide range of sub-jects and present many different viewpoints.It is not intended that they shall reflect theparticular ideas of any individual or group.Constructive comments on any of the Pub-lications will be welcome.

Additional copies of this Publication may beobtained from the office of the Secretary.The price to members is twenty -five centsper copy and to non - members seventy -fivecents per copy.

COPYRIGHTED BYNATIONAL ASSOCIATION OF

COST ACCOUNTANTS

JULY 2, 1923

National Association of Cost Accountants

R A D 1 0 E D U C A T 1 0 N A L C A M P A I G NBroadcastings by National Association of Cost Accountants

Dur ing the pa st two month s the a i r ha s l i ter a l ly been ful l ofcost gospel. Through ar rangements with thi r teen broadcastingsta tions throughout the United Sta tes a series of four popular talkson cost accounting were broadcasted under the auspices of theN. A. C. A.

These talks were not intended to deal with the technical phasesof the subject but were designed to emphasize the economic valueof cost accounting to indust ry, to employees, employers, and toconsumers. The t i t l es of t he t a lks were: "What Cost Accoun t ingMeans to Industry," "Advantages of Cost Accoun ting to Worker s,""Advan tages of Cost Accoun t ing to Employer s," and "Advan tagesof Cost Accounting to the Public."

The purpose of th i s campaign was to cor rect a popu lar mi s-concept ion that cost accoun t ing is a technical procedure wh ich isrelated entirely to the internal records of business and has no directbearing on the broader economic problems. Such a concept ion isent ir ely untrue. If the consumer had a real under standing of whatsound costs in indust ry mean to h im in dol lar s and cen ts, he wouldbr i ng t he fu l l weigh t of h is opin ion to bear on Amer ican manu-facturer s and dist r ibutor s in order to compel them to opera te thei raffai r s upon the basis of accurate cost data .

Fur thermore, many of ou r industr ial problems and the dif-ferences between employer s and employed ar ise solely from a lackof fa ct s. If worker s understood what costs mean to them theywould take great er in terest in t hei r work and much wasted effor tmigh t be eliminated. Wider publ ici ty among worker s of accuratefacts r elat ing to the costs of product ion and distr ibut ion would notonly solve but would also prevent many indust r ia l deadlocks whichcost the consuming public millions of dollars a year .

Th i s campai gn was p repared a nd or gan iz ed by J. P. Jorda n ,our National Presiden t, and its success was due to his unti r ingefforts in preparing the materia l and arr anging for its distr ibution.

In order tha t there may be a permanen t r ecord of these ta lksand i n or der th at our member s ma y ha ve a n oppor tun i ty t o r eadthem , th e four t a lks are r eproduced exa ct ly a s t hey were br oa d-casted from the fol lowing sta t ions: WEAF, New York Ci ty; WGI,Medford Hil ls, Mass.; WHAZ, Troy, New York; WLW, Cincinnat i,Oh io; WCX, Detroit, Mich i gan ; WJAX, Cleveland, Ohio; WIAO,Milwaukee, Wisconsin; KPO, San Francisco, Cali f.; KWH, LosAngeles, Cali f.; WLAG, Minneapolis, Minn. ; KJR, Seat t le, Wash-ington ; WGR, Buffalo, New York, and WEAN, Providence, R. I .

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Broadcast No. 1

W H A T COST ACCOUNT ING ME A NS T O INDUST RY

The National Associa tion of Cost Accoun tants i s an organiza-tion only th ree year s old, but alr eady having a membersh ip ofover 3,000. I t i s not in a ny sen se a bus iness organ i za t ion but i swholly educational. The main objects of t h e Association a r e t odevelop and improve th e science of cost accoun t ing, and to serveal l who are in industry, both employer s and workers, by spreadingthe gospel that facts and facts only should be the guide of allbusiness transactions. When actual facts have been known to bothemployer s a nd em ployees i t has r arely been the case th at ser iousdisputes have arisen, causing loss of time and money to bothpart ies.

The deter min at i on of the cost of any pr oduct has long sin cepassed from simply t rying to find out what an ar t icle costs for thepurpose of fixi ng the sel ling price in t o a much broader and in-finitely more valuable phase of assembl ing facts which are valuableequal ly to both the employer and the employee. Cost Accountingrecognizes the fact tha t 98 ,70 of a l l human beings are honest ; tha tthey take an honest pr ide in thei r work; and that they are anxiousan d gl ad t o ha ve wha t th ey a ccom pl ish ma de a mat ter of actualrecord, par t icular ly where the employer in sists upon h is wor ker sbeing compensated and advanced on the basis of actual facts ratherthan th r ough the per sona l l ikes and dislikes of h is foreman andsuperintendent .

We a l l must admit tha t condi t ions in indust ry are today gen-era l ly far fr om ideal , and t hat t her e st i l l i s a wide ga p bet weenth e g r eat ma ss of worker s and the major i ty of employers. Wehea r a n d r ea d m a n y explanations of t h is condition, but in prac-tically every dispute which arises a careful analysis will revealthe fact that nei ther side in the dispute wi l l agree as to the actualcondi tions which exist, and regarding which the dispute has ar isen.This condition exists entirely on account of the absence of adequaterecords which honestly, fa i r ly and accurately r eflect the t rue con-di t ions in the indust ry or plan t where t rouble has ar isen .

In almost any other branch of act ivity we find r ecords broughtto the finest point of developmen t wherein no point of doubt is left,which records are anxiously awai ted, scanned and implicitly be-lieved by the millions of people who see them. An instance of thisis found in baseball. Every move of a baseball player i s recorded;every play is noted; every game is analyzed; and the results accom-pl ished by every team is a matter of the very finest piece of r ecordprocedure. Aft e r a season is closed our newspaper s are full ofenormous tabulated sta temen ts by percentage whereby everyleague, team and player i s shown in terms of figures, from whichtables the publ ic an d the team owners decide who i s the grea test

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player of the year and what player leads in the various st aract ivi ties in wh ich they excel .

We find the same in football, tennis, basket ball, golf andother spor ts. People to the exten t of thousands wi l l choke str eetsin fron t of bul let in boards watch ing the r ecords of a wor ld ser iesgame or a footbal l game. Yet in our every day l i fe, i ndus t r y ingenera l h as not yet a wa ken ed t o t he fa ct t h a t r ecords of accom-plishment in connection with production and the cost of productionma y be m ade just exa ct l y as in t er est i ng as th e spor t s jus t m en -tioned. The coal str ike, r esul t ing in the appoin tmen t of the com-mission to find the r ea l facts in connect ion wi th the coal indust ryis a wonderful example of lack of knowledge which is more or lessprevalen t in each individual indust ry in the country. I t i s p re t t ysafe to prophesy that when this coal commission completes i ts worki t wi l l 'br ing out facts wh ich wi l l clearly indicate the basic diffi-cul ties in the industry, the knowledge of which should make com-paratively easy a permanen t solution which wil l greatly benefi t al lthree in terested part ies, the publ ic, the operators, and the worker s.

The National Association of Cost Accoun tan ts is in a mostadvan tageous posi t ion for br inging to the a t ten t ion of the publ ic,the employers and the workers the enormous benefi ts to be der ivedfrom knowing the actual cost of product ion, the word "cost" beingused in it s very broadest sense. On accoun t of i t s being an Asso-ciation separa te and distinct from employers and likewise fromworker s, and its object being educational, it is in a position toadvance argum en ts wh ich ca nnot be disputed on the score that i thas i n any way a sel fish in ter est . I t i s in a posi t ion to show toworker s wher e i t i s to thei r g reat est profi t to cooperate in everyposs ible wa y in the assembl ing of accurat e f igur es, as it can beproved that these figures righ tful ly used wi l l mean lower cost ofproduct ion a t the sa me or greater wages , wi th the r esul t th a t thesa me or g r ea t er wa ges wi l l buy mor e goods an d t her eby give toal l a far greater value to be secured for every dol lar earned.

I t is in a position to show the employers that they cannotpossibly expect to proper ly manage thei r business affa i rs wi th anydegree of fa i rness and success unless they are guided by actualfigures, accura tely giving them the r esul ts accomplished by thei rvar ious depar tmen ts and the personnel in each depar tmen t . Thateach employer must in sist that h is foremen and superintendents beguided in th ei r wor k by t hese a ct ual r ecor ds of resul ts, therebyel imina t ing t he grea t major i ty of causes for disputes wh ich havear isen in the past on accoun t of un fa i r dealing which was largelythe r esul t of ignorance of condi t ions, r a th er t ha n fr om premedi -ta ted desi re to invi te t rouble.

It is in a posit ion to show to the publ ic that added cost of dis-putes can be eliminated to a very great degree if it would getsol idly beh ind a movement to in si st tha t indust ry, plan t by plan tand as a whole, should take most decided steps to cont inuously andadequately record r esul ts.

In three succeeding broadcastings we will show the great valueof adequate cost accoun t ing to every per son in th is coun try. On. . . . . . . . . . . . . . . . . . . . . . we wi l l b r oa d c a s t t h e A d va n t a g e s o f C os t :Accounting to the workers. O n . . . . . . . . . . . . . . . . . . . . . . w e willbroadcast th e Adva n tages of Cost Accounting to the employers,and on . . . . . . . . . . . . . . . . . . . . we wi l l broadcast the Advan tage' ,of Cost Accoun t ing to the Publ ic.

The ma t ter of accoun t i ng for cost of pr oduct ion is one tha t ;r equires the cooperat ion of mana gemen t and worker a l ike, and i ti s bel ieved that i f the adva n tages to be r eceived by a l l a r e r ea l lyunderstood, this cooperation would become very general and wouldaccomplish most wonderful results. Everyone hear ing this andsucceeding messages has a real responsibi li ty in connect ion wi ththe cost of production and should take this responsibility veryseriously.

The headquarters of the National Associat ion of Cost Account-an ts i s a t 130 West 42nd St . , New York City. Anyone desir ing tokn ow m or e of th ei r wor k m a y get fu l l deta i ls by addressing theNational Associat ion of Cost Accountan ts, 130 West 42nd St ., NewYork City.

Broadcast No. 2

ADVANTAGES OF COST ACCOUNTING TO WORKERS

Last . . . . . . . . . . . . . . . . . . . even ing we broadcasted from th isstat ion the objects for which the National Association of CostAccoun tan ts are working in connect ion wi th indust ry. Our mes-sage to -night is th e Advan t ages of Cos t Accoun t in g t o Wor ker s.

The Accoun ting for Costs in i t s broadest sense means a greatdeal more t han is r ea l iz ed by t he m ajor i ty of people , a nd i n factmean s a grea t deal more th an i s r ea l iz ed by a ver y g reat num berof employers. There have been many cases in the past where CostAccoun t i ng h as been r ega rded by t he worker s a nd unfor tunatelyby m any man ufa ctur er s as bei ng a pr ocess of a ssem bl i ng f igu resfrom the standpoin t of get t ing someth ing on somebody. Any in -format ion obtained for the sole purpose of cr i ticism frequently doesmuch more dama ge t ha n good an d we h ope t o convince you th ataccurate cost accounting is of equal value to both worker s andemployers.

The Nat ional Associat ion of Cost Accoun tan ts advocates theprinciple that 98°fo of all human beings are honest. Thereforeevery effor t should be made to establ ish records wh ich wi ll give tothis great number of h ones t people the opportun ity to have theresul ts of thei r work shown in defini te and usable figures, in ordertha t th e ma na gemen t of each company m a y kn ow wh o deservescommendat ion and who is producing the best r esul ts for h is com-

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pany. The day of r egula t ion of indust ry on the basis of per sonallikes and disl ikes of foremen and super in tenden ts i s past .

In every manufactur ing inst i tution there i s a constan t oppor -tun i ty for p rom ot i on . Two factor s con tr ibut e to th is ma t t er ofpromot ion, the fi rst being that the normal growth of a lmost everycompany requires more supervision, thereby creating new andhigher jobs; and second, the normal changes brought about th roughresignation or sh ifting to other positions automatically makes theseposi tions avai lable to other s.

As advancement to a different nature of position does nota lways com e to every wor ker , t he natura l question will ar ise a sto what benefit Cost Account ing is to workers who stay at the sameposition. Before answering this question, one point must be clearedup in the minds of every worker i r respect ive of who he is or whathe does. Th is poin t i s tha t there i s an un l imi ted amoun t of busi -ness for every compan y wh o ca n sell a t pr ices which meet com-petition and better still , at prices which will stimulate consumption.For in stance, if sui ts of clothes sel l for $50 when th ey ough t t osell for $30 it is but natural for the public —and tha t meansevery one of us —to wear a sui t longer than we would i f we couldbuy i t for $30. Therefore less sui ts ar e made a t th e h igher cost .Reduce the cost, and more suits wil l be used and everyone has thesame or m ore work. The same reason ing appl ies to shoes, shi r ts,dresses and to a l l kinds of goods.

Now —If each on e of us as a worker does everyt h ing in ourpower to reduce costs by saving or helping to save wasted time andmateria l, our wages may remain the same or increase, and we maybuy much more wi th the money we earn . Th is i s not theory, butis a cold fact.

When the ra tes of wages are taken under considerat ion in anyindust r ia l plan t , the considera t ion of these wages is very largelyinfluenced by that por tion of the cost of the product other than thedirect wage cost involved. To the great major i ty of worker s theseexpenses are absolutely unknown, and naturally do not receive verymuch consideration.

To the managemen t, however, all these expenses which areknown as overhead, have an enormous bear ing on the wa ge r a testhat can be paid to the worker s and st i l l keep the cost of the pro-duct where it can be sold. And in the past , m any ma nager s havefailed to enlist the interest of t h e worker s in assisting to keepdown these costs in order that sufficient savings ca n be ma de t ojust i fy the managemen t in paying the most sa t isfactory wage r a teto the worker s.

The worker s in any indust r i a l p lan t know mor e about wheremoney can be saved th an th e m an agemen t i t sel f can ever know.The mistaken idea in the past has been for workers to coun tenancewast es of th i s sor t on accoun t of th e sole th ough t t hat men h avegot t o l ive, a nd to l ive m us t ha ve a job. If th is waste is saved,

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costs decrease , more business comes and everyone works just thesame.

Worker s ask the quest ion as to what they can do to cut costs.This, of course, depends on th e ki nd of wor k each one is doing,but a number of instances will be cited. A mach ine operatorcan so in terest himself in what he is doing that he will firstof a l l do h is work as near ly per fect as possible. As man y oper a-tions are bound to produce some defective work the operator can, ina great m any cases , separa t e defect i ve work from t he good work,bein g a bsol ute ly fear less of th e r esul ts i f h e h as a sh op m ana ge-men t wh ich is fa i r and square. Doing th is wi l l save a large par tof the inspection expense. I t wi l l safeguar d th e pr oduct t o suchan ext en t t ha t th er e wi l l be fewer r e tu rn s from th e fi e ld a ft er i thas been sh ipped to the customer ; the product as sh ipped out wi l lat tain a h i gh er plane of qual i ty; the sales depar tmen t can sellwith less expense because they have a better product to sell;and the better product will bring sales by its own reputa tion .How many have though t of al l these consequences which mean lesscost and more sa les by l i tt le acts tha t can be done r igh t a t the ma-chine every min ute dur i ng t he da y? Machine operator s can bemore careful wi th thei r mach ines in the mat ter of keeping them insha pe; properly oiled; report ing to the foreman defects whichshould be remedied at once before greater damage takes place.Th is kind of in terest wil l reflect dir ect ly in the r educt ion of main -tenance costs, thereby cut t ing down a goodly share of this pa r tof t he overhead.

The cooper at i on of worker s in cut ting down costs can havebut one r esul t on a ma nagemen t t hat i s h onest a nd fa i r , a nd t h isresul t wi l l be sa t is fac tor y wages for t h e ones wh o t a ke th i s in-terest in the business. Th is does not mean that anyone is to workany h arder a t a l l , in fac t , h arder wor k is absolut ely unnecessary.It does mean , however , tha t those who are working should see thathead work is mixed wi th physi cal work and tha t th e moves madecount for actual accomplishmen t , r a t h er t h a n for wa s t e .

If the cost of product is reduced, this means that selling pricesare r educed a nd th at everyon e can buy mor e for a dol l ar th an hecould if the cost in general r emained where it was. So i t should beapparen t to anyone that the cooperat ion of worker s wi th the man-agemen t in the reducing of these costs, will have a most directreturn in the pockets and bank accounts of the worker s themselves.

The National Association of Cost Accountan ts as an edu-cational organization of worker s bespeaks the in terest and co-opera t ion of worker s of a l l kinds in the mat ter of the cost of pro-duction. We advocate no harder work, but r a t h er t h e additionto the ever yday work of the very power ful brain factor whichis possessed to a r emarkable degree by every worker in this coun-t ry. Indust ry needs the heads as well as the hands of everywor ker ; and i f t hey a l l wou ld fear l ess ly th row i n t he head wor k,

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costs would come down, and individuals would profi t both in wagesreceived an d i n wh at ca n be bough t wi th th ese wages.

Next . . . . . . . we wi l l broadcast th e Adva n tagesof Cost Account ing to Employers, and the following week

the Advantages of Cost Accoun t in g to t hepublic in general. It wi ll pay everyone to hear these broadcastings.

The headquarters of the National Associat ion of Cost Account-an ts i s a t 130 West 42nd St . , New York City. Anyone desi r ing tokn ow m or e of th ei r wor k m a y get fu l l de ta i ls by addr ess in g t h eNational Associa tion of Cost Accountan ts, 130 West 42nd St., NewYork City.

Broadcast No. 3

ADVANTAGES OF COST ACCOUNTING TO E MPLOYE RS

Last . . . . . . . . . . . . . . . . . . evening we broadcasted from thisst a t i on a few fa ct s as to th e Advan t ages of Cost Accoun t ing toWorker s. Th is even ing we wi l l speak of the Advan ta ges of CostAccoun t ing to Employers, and this will be found equally inter-est ing to everyone.

Fifty year s ago the manufactur ing of th is coun try was most lydone in small plants scat tered throughout the country, the major ityof wh ich wer e opera t ed by t h e own er h i msel f who wa s in dir ectcharge of al l branches of the work. In fact , the owner was on thejob from ear ly morn ing un t il la te a t n igh t , knew everyone per son-al ly, a nd con ducted h is affa i r s by a per sonal contact wh ich gavehim first hand knowledge not only of all that was going on, but alsoof each man who worked for h im. This was a most ideal condition,an d ever ybody di d h i s best beca use he knew th at h e wa s get t in ga squa re deal ; for th e "ol d ma n " kn ew ever ybody, a nd just wha teach was doing.

Business grew and these plants became larger and larger .In this growth the great value of the personal contact of thebusiness was over looked, as the foremen and super in tendents han-dled the worker s fr om an en t i r ely di fferen t an gle than the ownerformer ly di d a nd not bein g backed up by records, they handledmatters as best they could, and many t imes in a manner to best suitthei r own in terests, i r respect ive of the actual per formances of theworker s. In ot her words, th e own er of t he busin ess havi ng l ostthe per sonal con tact wi th h is men fa i led to subst i tute methods ofrecording actual performances whereby he could insist that hisoperat ing men would handle the worker s purely on a basis of mer itra ther than as a r esul t of per sonal l ikes and disl ikes.

Dur ing th is per iod coun t less cases of in just ice occur red, andi t was bu t na t ur a l t h a t t housa nds of di spu tes ar ose wh i ch ha d amost serious effect on the relations between employers and workers.

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As time went on, progressive managers recognized the factthat something had to be done to replace the old personal knowl-edge which the employer formerly had in the earlier days, and as aresult much more attention was given to the matter of plant rec-ords particularly those in connection with the cost of production.

The National Association of Cost Accountants is actively be-hind the idea that no industrial management can hope to reach thegreatest measure of success until they make the fullest use ofrecords of production and cost throughout the entire organization.The old thought that any publicity at all of cost and productionfigures is running the risk of allowing information to leak out ofthe plant, with detrimental effects to the business, is an absolutefallacy. No two shops are alike; and even if they were, the oper-ating or conversion costs have now become a matter of frequentinterchange between plants manufacturing like products with greatbenefit to all.

The most unfortunate part of the whole problem is that so fewemployers realize in the first place what is meant by costs and costrecords. Altogether too many think that cost records simplymean the cost of the product manufactured in its entirety, includingmaterial, labor and overhead. Cost figures as advocated by theNational Association of Cost Accountants go very much furtherthan simply to tell the cost of the product. The great volume ofcost in the overhead should be systematically analyzed by depart-ments and operations whereby each indirect department of thebusiness may be treated practically the same as a producingdepartment.

The burden of each operating department such as, for instance,the machine shop, the forge shop, the weaving room, the knittingroom and other like direct producing departments, should eachhave its monthly statement whereby the foreman in charge mayknow exactly how he operated for the month.

Comparatively few employers or managers have realized theenormous possibility in supplying their operating foremen withthese cost statements. The great major ity of plants of any sizeare organized in a way where maintenance and repair work, forinstance, is concentrated in a department by itself. This depart-ment will send men around the plant working on various repairs,and a great deal of repair work will be done in the headquar tersof the maintenance crew. This department is altogether too oftendivided up on a percentage basis to the various operating depart-ments and nobody has any detailed check on the amount of moneyspent on important repairs.

By having a set of standing monthly orders for each direct andindirect department, this repair work will be charged up to theproper standing orders of the depar tmen t fo r wh ich the work wasdone. Each month the foreman of each department will receive astatement of these costs, and it will be most surpr ising to the

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manager who has never opera ted in th is way to see the effects tha tsuch figures have on each foreman.

The mon th ly st a temen t of cost in connection with handlingproduct, time keeping, tool and store keeping, inspection and allsuch items br ing to each foreman a means of working out al l kindsof r eforms whereby th ese costs may be r educed. Guesswork anddoubts are eliminated, and the foreman knows just exactly how h isdepar tmen t i s runn ing in overhead expense, and fu r t herm or e heknows that the super in tendent and the general manager knowexactly the same thing. And with this knowledge, it is only humanfor h im to exer t every endeavor t o make th is r ecord just as cleanas it can possibly be made. How many employers listening inare giving thei r foremen these faci l it ies?

The Nat ional Associa t ion of Cost Accoun tan ts i s most st r en -uously advocating the use of standards in connect ion wi th produc-tion whereby constan t compar ison may lead the way to bet termen tof processes and const ruct ive work in connection with the var iousoperations in the plant. Employers have fa iled to realize that 809x'of slack product ion and h igh costs i s th e fa ul t of th e em pl oyer sthemselves in not knowing the facts. By fa r t h e g r ea t m a jor i t yof wor ker s, probably 98 %, are ready and wil l i ng to m ake t hei rwork coun t to the ful lest exten t i f they are given the oppor tun i tyand the backing to do so.

The Nat ional Associa t ion of Cost Accoun tants, therefore, ap-peals to every em ployer t o take imm ediat e steps to see th a t h i sbusiness is equipped with cost and production records wherebyevery employee in the company, foreman or worker , may haveactual knowledge of what he is producing and how wel l he is pro-gressing. I t i s inconceivable that a business can be proper ly runwithout i t ; and the employer who sees to i t tha t these r ecords be-come the guide of his business, is magnifying his managerial abilityalmost in propor t ion to the number of employees in the company.

Next . . . . . . . . . . . . evening we will broadcast theAdvan tages of Cost Accoun t ing to the Public, a n d we h ope t h a tever yone who has hea rd t h is and past broadca st in gs wi l l be sureto listen in.

The headquarters of the National Association of Cost Account-an ts i s a t 130 West 42nd St . , New York City. Anyone desir ing toknow mor e about i t s work may get ful l de ta i l s by address ing theNational Associa tion of Cost Accountants, 130 West 42nd St., NewYork City.

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Broadcast No. 4

ADVANTAGES OF COST ACCOUNT ING TO T H E PUBLIC

We h ave a l r eady broadcas ted dur in g th e l a s t t h r ee weeks agrea t deal of wh at t he Nat ional Associa t ion of Cost Accoun ta n tsis doing in connection with indust ry, including the Advan tagesof Cost Accoun t in g to Worker s a nd to Empl oyer s. Th is even ingwe will broadcast the Advan tages of Cost Accounting to thePubl ic, and the publ ic includes us a ll .

We h ave h ea rd a g r ea t deal du r i ng th e la st few year s of th eh igh cost of l ivi ng, but we ha ve n ot hea rd a s m uch as we shouldha ve i n con nect i on wi t h h ow t h ese cost s wer e m ade up an d wh ythey ar e so h i gh . We r ea d of st r i ke a ft er s t r i ke resul t i ng fromdisputes where somebody must be righ t and somebody wrong.It i s impossible for both to be r igh t . In how ma ny of these casesha s th ere been a true detailed sta temen t made public as to theexact posit ion taken by each side, giving proofs to substan t ia tethe positions taken! We will have to admit that such a thinghas r are ly been known.

The National Association of Cost Accountants is in reali tyan or gan i zat ion of the publ ic, a l l of i t s members in thei r pr i vatecapaci ties, whether in indust r ia l or professional work, being a partof the great organ izat ion of American indust ry working under thedirection of management as do all workers. The Association itself,however , i s pr imar i ly educational and is under the dicta t ion of noone except ing i ts own elected officers and members, and as such isactively spreading the gospel that we have reached the t ime wherecosts of p roduct ion must be kn own and fur ther , must be used forthe guidance of managemen t in all of i ts decisions.

The publ ic l i tt le r ea l izes the enormous percen tage of the costof product wh ich is concen tra ted in the indir ect costs. These in-direct expenses, called overhead, include all expenses other thanthe direct wages paid for producing the product and the directmaterial which enters into the product. This expense is madeup of hundreds of i tems which are the most difficul t to control inany business whatever . A li tt le here, a li tt le there added togethermake an astounding tota l which, in perh a ps t h e ma jor i t y of in-dust r i es , am oun t s to m or e th an t he dir ect wages paid.

Cost Accoun t ing as advocated by the Nat ional Associa tion ofCost Accoun tan ts is of a far di fferent nature than has been the casein the pa st . The public, being the customer , is en t i t led to knowmore about what i t i s paying for , and what en ters in to the cost ofthe goods wh ich i t buys. I t h a s been said and probably is t ruethat th e faul t of 807o of lack of product ion and h igh costs, whereexist ing, r ests wi th management on accoun t of i t s fai lure to actu-a l ly know what are t he t r ue fa cts. Th i s ma y be a r a t her ser iousar ra ignmen t of th e managemen t of such pla n ts, but i t i s a wel lknown fa ct t h a t t h er e still exists a lack of appreciation on the

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par t of managemen t in genera l that al l employees should be takeninto more or less confidence as to the cost of the items which makeup the tota l cost of the product manufactured.

Too many men are in managerial positions who are therebecause thei r family con trols the stock of the company or becauseof some other per sonal connect ion , and are not in thei r posi t ionsbecause they have earned them or because of any capabil ities what-ever wh i ch f i t t hem for the job. Nat ura l ly in such ca ses as th isit i s pret ty difficult to expect r esul ts which have a beneficial effectin th e r educt ion of cos t of pr oduct an d the br in gi ng of pr ices tothe level where they belong.

Other manager s are jus t t he opposite and are doing every-th ing wi th in their power t o so regula te the production in theirplants that the lowest cost is reached. These manager s believein paying good wages, improving the sta tus of worker s, andassist ing worker s in doing the best for themselves. This class ofmanagers embraces those who wan t to cooperate wi th other plan tsof the same indust ry, standardize methods of cost and product ionaccoun t ing and do everyt h in g i n th ei r power t o reduce costs, inor der t h at t h e goods ma y be sol d wi t h p r ofi t to th e stockholdersbut also at the lowest possible price to the public. These managershave formed themselves into associations whereby a systemat icbetterment of knowledge may be accomplished. We ar e r efer r i nghere to those associa tions which are absolutely honest, who confinethei r act ivi t ies t o the improvemen t of cur ren t pract ices and arefar above the class of those who use such advan tageous intercour sein an improper manner .

The publ ic can do noth ing bet ter than to encourage the in ter -change of ideas wi th in an indust ry, as i t i s bound to have a di rectand beneficial effect on the cost of production with a resultan tdecrease of sel ling pr ices at good profi ts to the plan ts.

As sta ted before, th e publ ic i s pa yi ng the bi l l in everyth ingit buys for inefficiency and for thousands of disputes wh ich r esul tfrom inefficien t and unguided operations. It is inconceivable thatthe gr eat ma jor i ty of t hese d isputes woul d ever come to an openbreak i f both sides were ful ly posted in r espect to a l l of the factsin connection with the case. And far less would be the liabil ity ofopen breaks i f m ana gem en t in general provided proper cost ac-coun t ing met hods, taking in to thei r confidence the foremen to aconsiderable extent and the workers to a sufficien t exten t wherebyeveryone in each plan t has a clearer concept ion of a l l t he t r an s-actions wh ich take place. Cer ta inly a cooperat ive ar r angemen t ofthis sor t cannot help but obviate 99 out of every 100 disagreementswhich otherwise would take place.

Organizations of worker s could do no gr ea ter service to i n -dust ry than to take an actual and constructive interest in therecords of product ion and cost with which they are concerned, co-opera ting in saving unnecessary costs, and thereby mainta ining

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good wages and working conditions by actual cooperation andassistance, with the guidance of figures furnished by the manage-ment. Workers of all degrees have responsibilities beyond workingwith their hands. If they would recognize this responsibility, andplace their mental ability at the disposition of their employers andtake steps to create condit ions whereby they could give to theiremployers greater results through knowing where these resultscould be produced, most remarkable consequences would follow.

The National Association of Cost Accountants is an educa-tional organization and is doing everything within its power tospread the gospel of adequate cost accounting and the full useby both employers and workers of the figures obtained fromcost accounts, in a cooperative campaign to reduce costs; not byworking any harder, but by eliminating waste and inefficiency andgetting far more for the dollars that are paid out.

The headquarters of the National Association of Cost Account-ants is at 130 West 42nd St., New York City. Anyone desiring toknow more about their work may get full details by addressing theNational Association of Cost Accountants, 130 West 42nd St., NewYork City.

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Vol. INo. 7— Accounting for By- Products, Research Dept. N. A. C. A.

Vol. IINo. 7— Purchase Orders and Purchase Records, Ho me r N . Swee t

No. 9 —Cost Accounting for Public Utilities, E. D. Bistline

No. 15 —What Is Wrong with Cost Accounting? G. Charter Harrison

No. 16—A Method of Distributing Factory Payroll, Matthew Porosky

No. 17 —Coal Production Costs, R. W. Gardiner

No. 18— Uniform Cost Accounting Methods in the Printing Industry, W. B.Laurence

No. 19 —A Cost System for an Electric Cable Plant, Fred F. Benke

Vol. IIINo. 4 —Some Cost Problems in the Hawaiian Sugar Industry, F. A. Haenisch

No. 6 —Some Phases of Cost Accounting in the Chemical Industry, C. B . E.•Rosen

No. 7 —Cost Accounting in the Soap Industry, fI'illiam C. Koch

No. 9— Methods of Accounting for Waste in a Cotton Spinning Mill, George D.Klirnmer

No. 10 —List of References on Interest as an Element of CostNo. 11 —The Scrap Problem, 1. W. Kokins

No. 16— Distribution of Operating Costs of Centralized Power Plants at LowCapacity, Fran k B. fVolfe.

No. 19— Normal Burden Rates, Charles Van ZandtNo. 22— Principles and Practice of Construction Costkeeping, Will iam Al.

AAder (out of print)

Vol. IVNo. 1 —Cost Methods in a Hosiery Mill, 1'V. F. Evers (out of print)No. 2— Woolen Mill Costs, Clinton W. Benn ett (out of print)No. 3 —First New England Regional Cost Conference.No. 4 —Cost Accounting in the Manufacture of Iron and Steel Sheets, Keith

B. lVoods (out of print)No. 5— Steamship Operating and Terminal Costs, Joseph I. Mulhern and Urbain

RobertNo. 6 —Cost Practices and Problems in the Production of Coke, C. C. Sheppard:No. 7— Production Costs in the Manufacture of Phonograph Records, C. 1.;

BortonNo. 8 —Cost Problems in the Wrought Iron Industry, Carl G. Jensen, Comp.No. 9— Prices, Profits and Production, A. F. Stock and Al. B. GordonNo, 10 —Cost Accounting for Cranes and Hoists, P. E. S to lenburNo. 11 —Cost Accounting in the Tool Steel Industry, John J . KeefeNo. 12.—Cigar Manufacturing Costs, A. H. Berman (out of print)No. 13— War -Time Depreciation in Open Hearth Steel Plants and Rolling Mills,

J. I . RodaleNo. 14— Papers and Discussion — Second New England Regional Cost Confer.

ence (out of print)No. 15— Principles and Practice of Construction Cost - Keeping. Part I I _

Analyzing Costs, 11'illiam .11. AffeldcrNo. 16— Standard Costs —How to Establish and Apply Them. William F. WorrallNo. 17 —A Method of Collecting Direct Labor Costs and Statistics, Georges

H . FrieselNo. 18 —Cost Accounting for Self Laying Track Tractors, Percy EhrenfeldtNo. 19— Papers and Discussions —Third New England Regional Cost ConferenceNo, 20 —Radio Educational Campaign

Copies of the above publications which are not out of print may be obtained from the officeof the Secretary of the Association, 130 W. 42nd Street, New York City, at the price of 75 centsper copy.