' THE TEXTILE WORLD RECORD T T 600 KINK BOOKS No. lA jflnks on Cost Finding IN Knitting Mills Compiled from the Questions and Answers Department of the TEXTILE WORLD RECORD for its subscribers only PRICE 75 CENTS LORD & NAGLE COMPANY Publishers Boston, Mass., U. S. A. Class Book i.9V MW .. COPYRIGHT DEPOSITS 3. All the yarn will run off "clean, cause, — ;icity with ibbing: itself, I from re. any •rect lains r of one be= (a) The taper (or pitch) is correct, having- been de= termined by exhaustive tests on a grreat variety of Icnitting: machines. ib) The paper cone tube has the same acute taper (or pitch) as the outer surface of a full cone, and there is no " drawing in " or " bunching:" of the first few coils. (c) No. 50 "Universal" machine does not make "cobwebs" or "overruns." UNIVERSAL WINDING 95 SOUTH STREET, BOSTON CO. DYEING Machinery for Knit Goods, Yarn and Raw Stock. Hydraulic and Power Screw PRESSES FIRE-PROOF STEEL CONSTRUCTION DRYERS For all Textile Materials "Hurricane" Stocking Dryer The Philadelphia Drying Machinery Co. 6721 Germantown Ave., PHILADELPHIA, PA. THE TEXTILE WORLD RECORD KINK BOOKS No. lA Kinks on Cost Finding IN Knitting Mi Compiled from the Questions and Answers Department of the TEXTILE WORLD RECORD for its subscribers only LORD & NAGLE COMPANY Publishers Boston, Mass., U. S. A. b 0.0 ^ ^ .c Copyright, 1910 LORD & NAGLE COMPANY Boston, Mass. ©CI.A261751 PREFACE For years the subscribers to the Textile World Record have been invited to make free use of its columns in asking questions relating to the manu- facture of knit goods, and in vievv' of the general seeking after information on knitting mill organization and costs, it occurred to us that if some of the most impor- tant and most interesting of the practical questions relating to this subject that have been answered were gathered together in a handy form for quick reference it would meet a wide-spread want. This book contains information which has been supplied by manufacturers, superintendents, overseers and cost accountants from their private note books and their stores of knowledge gained by experience. It should be remembered that the cost of yarns, labor, supplies and other materials w^hich enter into the cost of knit goods varies from time to time and in different localities, therefore the figures given should be taken as illustrating the method, rather than as giving the exact cost of goods under all conditions. Many questions are answered and much information given in this book, but subscribers should remember that if there is any information^they desire which is not given in this volume, it is their privilege^ to ask the Questions and Answers Department of the Textile 3 4 PREFACE WORT.D Record, and every effort will be made to pub- lish the information for themi provided the question is one of general interest to the trade. No effort has been made to arrange the subjects in any fancied order of precedence, as each question with its answer is complete in itself. The book is fully indexed, which should enable anyone to find the in- formation he seeks in the shortest possible time. Grateful acknowledgment is due to the men who have supplied the information, and if Kinks on Cost Finding in Knitting Mills should benefit any of the large number of men for whom it is intended, both they and the publishers will feel that its mission has been accomplished. TEXTILE WORLD RECORD Lord & Nagle Company Publishers KINKS ON COST FINDING IN KNITTING MILLS Cost of Manufacturing 200-Needle Half Hose I am about to start in the hosiery business and would like an estimate of the cost of manu- facturing 200-needle half hose, using a lisle yarn. Allen (1043). It is a very difficult matter to estimate the exact cost of any article without being acquainted with the existing conditions, such as location, equipment, labor supply, capacity of mill, etc. The capacity of the mill has considerable bearing on the cost of manufacture. The larger the capacity the less the rate of mill expense will be per dozen. I will endeavor to present a system by which it is possible to figure the exact cost per dozen of any grade of hosiery regardless of the size of plant. In large mills it is usually desirable to know the cost of operating each department and for this purpose we will classify each department separately, taking up each operation, and every item bearing on the cost of the article. In the knitting department we find the following items of expense: 5 6 KINKS ON COST FINDING (1) Kind of yarn, 2-40s. Price of yarn per pound. Weight of yarn per dozen. Total cost of yarn. Knitting ribbed tops. Cutting ribbed tops. Topping per dozen. Transferring per dozen. Waste. Handling and superintendent. (2) Looping Department. Turning per dozen. Looping per dozen. Mending per dozen. Hemming per dozen. (3) Dyeing Department. Turning per dozen. Singeing per dozen. Dyestuffs per pound or dozen. Drying. Superintendent and handling, per dozen. (4) Finishing Department. Turning per dozen. Boarding per dozen. Pressing per dozen. Brushing per dozen. Mating per dozen. Stamping per dozen. Ticketing per dozen. Folding per dozen. Boxing per dozen. Handling and Superintendent. In addition to these we must add the following items of general expense: Per dozen. Fuel. Power. Oil. KINKS ON COST FINDING 7 Office. Taxes. Repairs. Insurance. Lights. Supplies. Express. Advertising. Selling. Miscellaneous. It would be impossible in an article of this kind to give the cost of each of the above items, or the cost of the yarn for different years. Local conditions will have much to do with some of them. I will give prices of different operations in the various departments and in this way give a close estimate of the cost of manufacture of the goods. I find a 2-36s to 2-40s lisle would give better results on this gauge work, and the goods will finish 14 ounces per dozen. We will assume the yarn will average about 35 cents per pound. Using this as a basis we find the cost as follows: Per dozen. Cost of yarn $0.31 Knitting ribbed tops 005 Cutting ribbed tops 005 Topping ribbed tops 07 Transferring ribbed tops 045 Waste 04 Looping 06 Turning 005 Mending 03 Turning second time 005 Dyeing 11 8 KINKS ON COST FINDING Turning two times 01 Boarding 02 Pressing 01 Mating 02 Stamping 005 Ticketing 005 Folding 01 Box and Boxing 05 Total SO. 815 The above practically includes all the actual expense of manufacture, but to this must be added the following miscellaneous items: Per dozen. Seconds. Fuel. Power. Oil. Office. Taxes. Repairs. Insurance. Lights. Supplies. Express. Freight. Advertising. Selling. Miscellaneous labor about mill. Superintendent. This will bring the actual cost to about $1.31 per dozen. In order to find the cost on each of the above miscellaneous items it would be necessary to keep a separate account of the amount paid out and the rate of each based on the production for one year. KINKS ON COST FINDING 9 The item classed as "superintendent and handling" includes all of the regular day workers* wages, including superintendent and overseers. In a small mill this item is often reduced to a very low figure by having one overseer look after several departments. Merrill. Cost of Manufacturing 200-Needle Half Hose We were extremely interested in Merrill's answer on the cost of 200-needle half hose on page 683 of the March issue (given in the pre- ceding question and answer). We would like to ask the author of this article a few questions as follows : Is not 1 1 cents rather high for dyeing one pound half hose? We would also like to know what part of the co.st of the miscellaneous items is charged to selling expense? The total cost of these items is 49 3^ cents. In this case would 15 cents cover the selling cost, leaving 34.5 for mill expenses? In figuring our cost we figure the cost in the warehouse and then add to it the cost of selling, as we do not want to include selling cost in our inventory figures. We understand of course that the cost of selling varies in different organizations, but what we would like to know is, in these figures what is the actual mill expense and what is the selling expense? Jefferson (1071). Eleven cents per pound is somewhat high for dyeing black. However in figuring costs I have always made it a practice to figure a little high as I would rather have the actual cost price a little too high than too low. In a mill of a large capacity and which manufactures a great lO KINKS ON COST FINDING number of different style? it is a very difficult matter to figure the exact cost, as no matter how complete a cost system may seem there are always some items of costs which are sure to be overlooked. I have known managers to use their cost system as a basis for figuring their profits from month to month on actual goods sold, and in such cases almost invariably the cost has been found too low and the expected profits failed to materialize when the regular inventory is taken at the end of the fiscal year. For this reason I have found it advisable to figure a little high. In regard to actual cost of dyeing, will say that the cost will run from 6 to 11 cents per pound, according to facilities and capacity of dye house. The method of dyeing used will also have considerable to do with cost of same. Many of the larger companies have their own secret process of dyeing, and some of them have been able to reduce the cost to. as low as $4.50 per hundred pounds. This, however, is an excep- tion and is found to be impossible on the part of the small manufacturer owing to the fact that the large salaries demanded by dyers having their own secret process will increase rather than decrease the actual cost in a mill of small capacity. As regards the cost of selling, this depends largely upon the method used for disposing of goods. Some manufacturers have no regular salesmen, disposing of their goods direct to jobbers. Others depend largely on advertising KINKS ON COST FINDING II and selling direct by mail order system, while others sell direct to the trade. In the article in the March issue I figured the cost of selling at 10 per cent, of the selling price. At the present time we are manufacturing goods similar to the class of goods you are seeking information on, and the actual cost price of same is $1.37. The selling price is $2.10. We figure our sell- ing cost at 10 per cent., or 21 cents per dozen on this class of goods, thus leaving 283^ cents as mill expense. Merrill Cost Accounting for Knitting Mills We make a number of lines of goods and have considered installing a cost system which would give the cost of each line and the profit from it, but before going into the matter I want to know just what it would do and how it would do it. Any information you can give me on this, or an example of a system and the results will be appreciated. Brown (1763). We would recommend that "Brown" study the explanation of cost accounting by J. Lee Nicholson, author of "Factory Organization and Costs," and president of the American Cost Accounting Co., which follows: Factory cost accounting should be devised in such a manner as to show not only the cost of the final product, but also to give unerring indication of the exact working conditions and efficiency of all departments. The cost of production and operation should be accurately known and should be properly 12 KINKS ON COST FINDING tabulated, so that it may be compared with previous and subsequent costs. In this manner any variation in the cost of manufacture is im- mediately determined, and any economy that may be necessary is at once brought to the attention of the executive, who is thus enabled to acquaint himself with all the details of the factory, to be fully conversant with the labor and material cost, and to know from day to day the results and profits of his business. The man with an efficient cost system is work- ing in clear daylight while the one with a de- fective system, or without any, is groping in the dark and the advantage gained by the former is so great that it almost assures success from the outset. It is not only necessary to know the total cost of the article manufactured, but the cost of each operation as well. This cost should include all factory expenditures, such as material and sup- plies, direct and indirect labor, department indirect expenses, general factory expenses, maintenance and depreciation and, in fact, all expenses of whatever description and kind that are connected with the plant. All indirect expenses, properly chargeable as cost of pro- duction, should be distributed according to actual expenditures and not according to past experience, as is usually done. The cost records should clearly indicate the efficiency or inefficiency of all operating depart- ments and should make it possible to prevent KINKS ON COST FINDING 1 3 waste, shop errors, loss of time, or negligence on the part of employees. It is advisable in many manufacturing estab- lishments to have the cost records show the efficiency of the machinery. The cost record should show what it costs to maintain and operate each machine, as well as the capacity and working efficiency of each, in order that a proper record of production may be obtained. These records should be so arranged as to indicate whether the machines are 40, 50, 80 or 100 per cent, efficient. By this means, the decreased production is at once brought to light and the capacity of the plant maintained. By supporting machine records with time records, the cost of operation may be obtained in such a way as to make it possible to operate most all departments on piece work prices based on comparative machine costs. It should be remembered that with decreased production, indirect expenses remain practically the same, but being distributed over a lesser output, the cost of production is increased. Many factory men think that while this principle applies to machine costs, or even in those cases where labor is paid upon a day basis, it would not apply in those cases where labor is paid upon a piece work basis. They neglect to note that while their direct labor cost is so much per article and does not vary, that their indirect expenses are not reduced materially by a decrease in production, and that, therefore, when these 14 KINKS ON COST FINDING expenses are charged over a smaller output, that the charge against each article is increased, or in other words — that the article then costs more. Indirect charges run from 50 to 300 per cent, of the direct charges, varying according to the class of business. There are perhaps more mistakes made in applying indirect expenses than in any other elements connected with the finding of costs. The usual method of adding a certain percentage upon every article manufactured to cover all indirect cost is wrong in principle. The principal elements in indirect charges are department in- direct, department supplies, general indirect and general supplies. The accurate cost of any article cannot be known unless the indirect expenses are handled under these divisions, for instance, some depart- ments have more indirect expenses than others. One department may demand more floor space than another. The number and salary of foremen may be greater in one department than in another. And in the same manner, such items as indirect labor, power and supplies vary considerably in the different departments. Then again, all articles do not pass through all of the operating departments, and the charge for indirect expenses varies accordingly. For the sake of illustration, let us suppose that there are a certain number of operating departments in a factory, say five. A certain class of product passes through all five of these KINKS ON COST FINDING 1 5 operating departments. Another class of product passes through but three of them. It is evident that by charging a fixed percentage for indi- rect expenses on all articles, that the product which passes through only three departments is being charged the same as the product which passes through all five departments. In other words, the indirect expenses of the two depart- ments through which this product does not pass are being charged up against the cost, the same as if it had. By this, it can clearly be seen that unless indirect is applied (1) by departments, and then by general indirect, that the accurate cost can- not be shown, for, unless this is done, some articles will be charged with more than they should be and some with less than they should be. In order to give a clearer insight into the methods of accounting for cost keeping, I will quote you classifications from an operating ledger and general ledger in a textile plant. Under the general classification "Factory Ex- penditures," the operating departments would be Sorting Knitting Scouring Rib knitting Carbonizing Seaming Dyeing Boarding Picking Finishing Carding Packing Spinning Box department The cost of operating each of the departments and the cost of each process through which an article passes is determined. And this cost in- 1 6 KINKS ON COST FINDING eludes not only the prime material cost and direct labor cost, but also all indirect expenses chargeable against each separate department. Such expenses would be as follows : Indirect labor Maintenance Supervision Rent Supplies Incidentals Light, heat and power In addition to the expenses which should be charged against one department or another, there will be certain expenditures which are som^ewhat general in their nature and must be charged against all departments. To the depart- ment expenses, as stated before, there must, therefore, be added the pro-rata share of each department in these general indirect expenses, which are as follows: Superintendent Light, heat and power Suj)plies Freight, express and cartage, inward Insurance Taxes Maintenance Telegraph and telephone Postage, printing and stationery- Salaries of office clerks Factory office supplies Incidentals Depreciation The product of such a plant would be classified as follows: Men's garments Ladies' garments, and Children's garments. 1 KINKS ON COST FINDING 1 7 Each of these classifications would in turn be subdivided. For example, the subdivisions under men's garments would be: Natural wool — mottled Natural wool — mixed Fine natural wool — mixed Coarse natural wool — mixed All wool — natural Fine camel hair Coarse camel hair All wool camel hair ^ Plush — natural Phish — solid colors Miscellaneous The sales in each of these subdivisions, to- gether with the cost of sales and the gross profit, would be shown. Against the gross profit would be charged all selling and administrative expenses. The "sell- ing" expenses would include. Advertising Traveling expense Freight, express and cartage, outward Commission Salaries of salesmen and the "Administrative" expenses would include Salaries of general officers Legal expenses Salaries of general office clerks Interest Merchandise discount \ Postage, printing and stationery- Telegraphing and telephoning Depreciation of fixtures and furniture Insurance Doubtful accounts Incidentals CO IC _ o _ O iC M ^ ^ "^'?^ sis? ^ a§ r.:,^ 1~ cc 'm' 05 ""l o Pi ^ '~* S S ?i S|?J g^ £§ i sg s X. s 5 ^ § — ^ c ^' w t^ ,_l ,_^ t^ ^ i^ r^ o Oi ^ - ^-'g f5 l^ '"' :S t^- Ss ^ z a s T-l 5-1 ^ S o- ^ i lO ^ o - - - - - - - - - - - si 1 o ij^§slf?^ t^ O rr, ,_i CO CO lO m r—l -* -<*l ■^ , § s s s ?^ § ■X d (M ^ c (M Ol o H ^ u P '* ^ -t" CO ii^ - - " - - ■c 1 lO TO iC i^ •* -^ x; oi ^^ ■c "M r, CO CO CO ;?:; (M o CO g ->d< Si OJ ci JO C (M tt ^ o a C5 p (>> -M «5 '-' 35 'C5 ><^ -a _r ,_! W m » 1 # : : - - - = :• 1 IC iO o Ci i« o Ol 01 bC i^ io Oi 3i cTj a lO ^ iC IC Ol ":i — eo _^ CO 1- i^ >c ;i C-. CO c •* rH ,^' ro i"" -r^ O '^ -; -o rH tc cc '^ I- ■^ '"' ■if t? ^- g~ ^ i^ X c B. rt Ul s °^ .2 i 3 ^ H § ■+S. a i«i Ui ^ :^ l^ Qi c:> ^ <^ NO vS J^ W^ ^ 'n 1 :| tn ^ Q ^ ■^ :i' 1 ^ ^ ^c^ KINKS ON COST FINDING 25 TicKet No. ^0 5ty/e No f 5ize of Yarn Ccirt;{5- Set No Batch ^^,l90l moi do do Cotton do 5tiodd\/ NOllS Color "Otal _ 3 0-0 lbs / ■^cJjL. A3(>o so .. ^ajjt^ tf-OZ so - ^30 I3^*unt/ urr^ s .. 7 s- j> o < vT> ^ U •^ ^ lO ^ '<^ o^ ?ii ^ ^ CO 1 IX ^ O Q: v© 1 ^ c:: lr> ^ 3 ^ ^ Mt4 f^ r^ ^ '^ fsi f '>0 o c C3 o ^ •^ 1 ^ V) .1 42 1 1 h: O Nj o ^ C^ Ci VU ^ ^ CCi ^ 'y^ ^ ^ 1 0^ vo fn ^ c: N •^^ <: Q> v\ Xs "^ i2 0; ^ 1 a; 1 1 36 KINKS ON COST FINDING for seconds before being sent to the shipping room, so as not to delay shipments, which would be the case if seconds were discovered when being folded. Fig. 11 is for a daily record of goods finished and shows the production of the finishing room in dozens. The name of each shirt or drawer finisher is put down. Fig. 12 is i.or a record of production in the dry room, snowing the number of pounds of cloth dried each day. This is tabulated in the column at Fig. 13. From this weight and the amount paid to employees in the wash and dry room, shown at Fig. 14, the cost per pound for washing and drying is calculated. Fig. 15 is for a record of stock received and used. It can be kept in the form of a book. It enables every bale of raw material to be traced, showing whether it has been used or not. From this book the amount of stock on hand can be verified. The cost per pound for handling the stock is also found from Fig. 15. The size of the form should be adapted to the business of the mill. Fig. 14 is a pay-roll form. This record should be subdivided with the names in each depart- ment as shown so as to keep the labor cost separate. Fig. 16 is for a summary of the business and should be kept in a book. A record of one month can be put on one page, or the book made smaller for a shorter period. The totals from the pay roll form Fig. 14, for each of the several departments are tabulated there KINKS ON COST FINDING 37 ^; 5 1 si iC ^$ 3 ^ ^ % CO ex. cv^ CL vo i ^ '^ s ^ N *r) ^ C» to f^ 5> ■a ^ « 1 o -^ N »- «o k^ ^-: ^l5 -J3 vi »o i-- .t> c^fi c:i r S^^ ^ P^ i ^ -«. ill "> :^^=^ t-^^ t: ;3 '^ >5 «^5 ^r^ Pickin Card Toial ^ J2 1^ a Q (^ «i!e 'S? KINKS ON COST FINDING 41 Payroll Week ending IQO \ ^ r^ ^ 1 ^ §, t5 t>- ^ It ^ "i'^ ^ ^ 10 •^ll^i ^1:1 k. 5 K ■^^ ^ I K ^ ^ 1 3 ^ ^ J 1 ■fe u i 5 *J l« 1 5f ll 1 ^ 3 ^1 l« 1 1 If Itl »0 ^a..„ |§§r." 1 s ti t o 5 l|^!H: ||5i3? X3 IJ 5 1 1 1 3 i?hJ *?b |i si? ■G ^ ^ ^ ^5 ^ 1^ 1 1 1 5j 1 3 "srir I ^ ^^ 1- <^Cv >^ ^- ■} 44 KINKS ON COST FINDING and the average cost per pound or dozen entered in the respective column. Fig. 18 is an invoice form, which can be made in duplicate or triplicate as required by the use of carbon paper. If made out in triplicate one copy is sent to the customer, another to the commission agent and the third kept on a loose- leaf file, making a complete sales book in detail. If used in this way no separate sales or day book is required. The amounts of the invoices can be posted direct to ledger accounts on Fig. 16. This avoids all mistakes, which are usually made when an invoice is copied or charged in a day book, besides saving the extra labor of copying, the triplicate invoice being made at one writing. They should be numbered in rotation in corner under binder folio. This number is entered in the column BF, Fig. 16. This binder folio number is entered in the general ledger so that the entries in the ledger will refer back direct to the details of the invoice. Figs. 16 and 17 are for a system of double-entry bookkeeping in a knitting mill and can be used with the other forms to ascertain the average fixed charges and expenses outside the labor cost. This system combines the cash, day booK and journal in one book and practically does away with the two last named books and saves considerable labor. It is necessary to have a corresponding credit entry for every debit entry, and a debit entry for every corresponding credit entry. It is easy to classify the different accounts under different Newton Knitting Mills Month of m "'■ 1 .^ ^ 5 |4 1 1 Q s o 1 ^ h & >» 5! 1 ^ 'r 1 ■| "^ bo •J) ^ 1 1 t2! s cS = - til El too bo ^ ^ "n ^ f^ o 1 1 5^ ^1 ^ o tK, >s J) 5 ^ vS> fl 2 l« o% t>Q l^" c^ n KINKS ON COST FINDING 47 headings as desired. As shown at Fig. 17, column 16 has a blank heading. Several of these can be left in the book for any new headings that may be required. Both sides of the book are required for Figs. 16 and 17 as shown. The debits and credits of each account are side by side, and the abbreviated terms. Dr. and Cr., are not written with every entry as in the old method of day book and journal. As shown at Fig. 16 the mill has bought ot John Robertson five bales of wool, the invoice amounting to $340.25. John Robertson is credited with the amount in cohimn 2. All materials which enter into the manufacture of underwear are generally classed under one head- ing, as merchandise, column 7. We debit merchandise account with it, but heie again raw mate_ial or stock may have a separate heading if so desired. The second entry to Thomas Smith & Co. is for goods shipped to them. This item is taken from Fig. 18, the customer being debited and the sales credited. The mill keeps a bank account, but will require cash in the office for small payments or for payments on account of wages. The third entry is cash drawn from the bank, the bank credited and cash debited. The fourth entry is for wages paid to Frederick Jones. Cash is credited and wages debited. When the pay roll is made up and the total amount ascertained, the correct amount can be drawn from the bank, the bank credited and the 48 KINKS ON COST FINDING wages debited. The fifth entry is for a check to New York Central Railway Co. for freight on wool. The bank is credited and freight is debited. This system saves the posting of many single items in one account in the ledger. The totals at the end of the month for each of the separate accounts are posted in the ledger in one amount, Esek Easton. Wage Systems and Defective Work We are about to make a change in our methods of paying piece work for knitting and looping. We have a number of girls doing excellent work and some few who persist in turning out their work in a slipshod way, careless of the menders they make. We had thought of the premium plan, charging the operatives for all menders and paying a premium to those who do good work and keep their menders under a certain percentage. We would like to know what is a fair average of menders for the knitter and topper on 176 and 200- needle cotton goods, and for the loopers on a 16 and 18-point looper with the same class of work. There is consider- able competition in this place and at times good help is scarce. If you can give us this inform- ation we would very much appreciate it. Milton (1142). This is the same trouble that all manufacturers have in starting a new mill. The premium idea is a good one if not carried too far. While it serves as an inducement for the help to do good work, still it establishes a precedent and it will KINKS ON COST FINDING 49 be found necessary to offer premiums every time you wish something done. I have found it a better scheme to pay a good price per dozen and charge them up with all bad work due to carelessness over and above a certain percentage. We must have in mind that looping is the most difficult operation in the manufacture of hosiery. It is much more difficult than picking on ribbed tops, as the stiches are much finer and tighter, and the operator has no slack course to follow as in the ribbed top. In breaking in new help for looping I have found it a good plan to take experienced pick-on girls or toppers, as they are commonly called, and teach them to loop. As the operation is very similar to top- ping, I find they learn it much more readily than a new girl. It seems a shame to spoil the work in the last operation. In order to avoid this we should, as. far as possible, avoid the use of new help in: the looping department. The new help can he-. used for toppers, in turn using the toppers for loopers. The , amount of bad work usually made by toppers and knitters and loopers on 176 and 200-needle work depends largely upon the class of goods being manufactured. For example, there would be considerable more mending on single thread work than on double thread. The mending on this class of work will range from 5 to 8 per cent., according to conditions. The menders in the knitting department should not 50 KINKS ON COST FINDING run over 3 per cent., about evenly divided between the toppers and the knitters. In the looping department, the mending should not run over 2 per cent. If the seconds are held down to about 5 per cent, in a mill manu- facturing this class of goods, it is considered good work. Above 8 per cent, is considered poor work. In a new mill the mending is sure to run considerably above this figure. In some cases I have known it to run as high as 16 per cent. From my own experience I have found it an excellent plan to have inspectors and menders in each department and have the work all in- spected and carefully mended before being passed on to the next department. In this way it enables the foreman of each department to see how the work is coming along. It also gives him an opportunity to show the operators their work. If the goods are mended before leaving the knitting department they pass as perfect. If they are sent into the other departments without first being mended they become so defective by the handling that they are unfit for use and are made into seconds. This plan necessitates extra handling, but I have found that it pays in the end, as a stitch in time saves nine. Weehawken. Cost Estimates for an Underwear Mill I would like a simple but sure method for determining the cost of underwear. I have records of what different lines of goods have KINKS ON COST FINDING 5 1 cost us for material and labor for a number of years, but have not added in the fixed charges. I would like to have you give me an estimate of fixed charges and estimates of fleeced lined and light weight underwear. Jackson (1780). A cost estimate in a manufacturing business must be divided into several calculations. First, there are the fixed charges, based on the pro- duction per day. Estimate 1 : If the average daily production of the' mill falls below the estimated quantity, the cost per dozen is increased, but if the pro- duction is above, then it is reduced. Should the production be 200 dozen per da}^ the cost would not be doubled. One super- intendent or manager would be required in either case. The boss knitter would answer for 100 dozen, but he would require an assistant for 200 dozen. The same remarks apply to the forewoman, sewing machine fixer and shipper, but in the case of the engineer and watchman, one each would do in either case. The cost of coal would be increased, as would also the oil, repairs and incidental expenses. The rent or interest on the building would be mors, unless the building was large enough to produce the double quantity. The cost for insurance, interest on wording capital would also be increased, but not doubled. Estimate 2: This is based on fleece lined underwear, requiring 14 pounds of yarn to the dozen. It is an estimate on piece work prices 52 KINKS ON COST FINDING paid to the help. As they are figured on the cost per dozen, the amount would not be affected by the daily production, but remains the same, whether for 100 or 200 dozen per day. The figures are based on good wages for the help, such as are paid in all knitting mills in New York State at this time. I have taken the prices for finishing to be from 10 to 12 cents for shirts and from 18 to 25 cents for drawers, because this item varies with the finish, the more elaborate style re- quiring more time and higher price. The price for covering also varies. In some cases all the seams are covered and in others only those at the shoulders and arm holes of the shirts, and the gussets and up the back seam of the drawers. The price given is for partial covering. Estimate 3 is for all materials except yarn. The cost for boxes varies because in some goods they are packed 1 dozen in a box, and in others only ^2 dozen, making 2 boxes per dozen. The cost for trimmings depends upon the. quality and cost of material used for finishing, - and therefore each separate style must be cal- culated differently. The cost for buttons also depends upon the quality of the button. The cost for cases depends upon how bulky the goods are. Fleece lined underwear being very bulky, the cost per dozen is greater than for light weight underwear. To the items already given must be added the cost for yarn. To ascertain the quantity re- KINKS ON COST FINDING 53 quired, carefully weigh all the bobbins of yarn put on the knitting machine in knitting a roll of cloth, and to this add the weight of the waste in winding the yarn on the knitting bobbins. After the roll of cloth has been washed and dried, have it taken to the cutting room and cut into equal quantities of shirts and drawers, including sleeves and gussets. A simple division will then give the amount of yarn required for a dozen of goods. An allowance for the waste cloth made in cutting can be made on the basis of the price that can be obtained for the clip- pings, or this can be omitted from the calculation and allowed to remain as an item of profit. I have not included in the estimates the capital invested in machinery, which for 100 dozen per day would cost about $15,000. Some manufacturers include the interest and depreci- ation on machinery in their fixed charges; others leave it out in their cost calculations and deduct the depreciation from the gross profits at the end of the year, leaving the item of interest on capital invested in machinery to be paid by a dividend on the capital stock from the net profits. From the foregoing it will be seen that it is difficult to prepare an exact estimate of costs, without being in possession of all the numerous details. Among the things to be taken into consider- ation are the following: Whether the power is water or steam. Whether the building is a 54 KINKS ON COST FINDING cheap frame or a substantial brick or cement construction. Whether the machinery used is the latest or second- hand. Whether the capital stock is large enough to supply working capital as well as the amount invested in the machinery and building. Whether the help to be obtained is experienced or green hands that will have to be trained. The weight of the goods. The quality of the materials used in finishing. Estimate 4: This is for the piece work cost per dozen on light weight underwear requiring 3 pounds of yarn to the dozen. The cost per dozen is considerably reduced on several items as compared with estimate 2 on fleece lined underwear. To this estimate must be added the estimates for materials, yarn and fixed charges as already given. Knowing the special conditions and with the assistance of these estimates, a knit goods manu- facturer should be able to estimate closely the cost of manufacturing fleece lined and light weight underwear. Estimate No. 1. — Fixed Charges (based on 100 dozens per day). per doz. Superintendent or manager 05 Bookkeeper 02 Boss knitter 04 Forelady . . . 02 Sewing machine fixer 03 Engineer and Fireman 025 Shipper 015 KINKS ON COST FINDING 55 Per doz. Watchman 015 Coal 03 Oil and repa^Ts 02 Needles 04 Freight and Cartage 01 Taxes 005 Stationery and Stamps 015 Building, say $10,000, 6 per cent. interest as rent 02 Insurance 025 Interest on working capital, say 5 per cent, on $60,000 for 6 months 05 Estimate No. 2. — Fleeced lined underwear, taking 14 lbs. of yarn to the dozen. Piecework cost per doz. Winding yarn .09 Knitting \ . '. .07 Drying .03 Cutting .05 Checking . 005 Seaming .07 Covering .05 Trimming (cutting out for neck in shirts and across top of drawers) .01 Finishing, shirts 10 - . 12 Finishing, drawers 18 -.25 Button-holing .015 Button sewing .015 Eyeletting and lacing .005 Stamping . 005 Folding in and pressing .... . 035 Folding out and inspecting. . .03 Boxing .01 Commission for selling, 5 per cent, on selling price 56 KINKS ON COST FINDING Estimate No. 3. — Materials (except yarn). per doz. Boxes to hold yi dozen .... .05 Trimmings 10 - . 25 Thread .035 Eyelets and laces ....'. .02 Buttons 12 -.20 Cases 04 -.06 Estimate No. 4. — Light Weight Underwear Based on goods taking 3 lbs. of yarn a dozen. Piecework cost per doz. Winding yarn . 035 Knitting .03 Drying .015 Cutting .025 Checking .005 Seaming .07 Covering .05 Trimming (cutting out for neck of shirts and across top of drawers) .01 Finishing, shirts 10 - . 12 Finishing, drawers 18 - . 25 Button-holing .015 Button sewing .015 Eyeletting and lacing (drawers only) 01 Stamping .01 Folding in .02 Pressing .015 Folding out and inspecting. . .025 Boxing .005 N. B. Y. Forms Used for Reports of Departments in a Knitting Mill I am informed that you can give me the forms necessary to keep information of the KINKS ON COST FINDING 57 rooms in a knitting mill to determine the con- dition of the room and what hosiery costs us. We do not know where we are at until the in- ventory is taken at the end of the quarter. Lewis (1780). Several years ago, before we adopted our present method of calculating the cost of our goods, we did not know "where we were at." The cost in some of our departments was twice as much as the estimate. Under such con- ditions it was impossible to fix the prices of our goods with any assurance that they would return a profit. By our present system, how- ever, we have found the estimated cost to run very close to the actual as determined by the accounts for the year made up after taking an inventory. Our difficulty now arises from the fact that some of our competitors apparently do not know "where they are at," judging from the low prices they put on their product. This demoralizes the markets and results in loss to us. It is, therefore, from a not entirely unselfish motive that I propose to give our competitors, through the Textile World Record, an account of our method of estimating cost. We will assume that the goods are 1^^-pound average misses' rib; selling price, $1.00 less 10 per cent, commission and 2 per cent, discount. This leaves 88 cents for manufacturing and profits. A run of four weeks will give a fair average of the daily production of firsts, seconds, roughs, waste, broken needles, loss for stoppage 58 KINKS ON COST FINDING for broken belts, machines out of commission for want of repairs, and all the other unforeseen things that happen in the best of mills. We first take the cost for buildings, machinery, N^eaies Knitter's Name No. I^eceived No. Returned No Broken Daily Total mekly Total M T ¥V T F 5 fyuin^i Oiojitljuf 10 V G _ Looping Nome Dozen Size Weekly Total M r V^ T F 5 30 25 30 3S 20 10 1^0 cUj. etc., at $40,000. The allowance on this must be enough to pay for repairs to the building, wear and tear of the machinery and interest, say 10 per cent, a year. This may appear high 1 8- ►5 ^ 'i! •So II 1 1 ►5 Seconds or Menders Doz IjN ■ t2 1 1 1 ^' § <0 S: >-• ^ "vO ^ ^ '^ >. ( cr, §- - u% 1 1 1 1 1 (J\ "5 CO ^S ^ ^ -o t;;: ^t >/\ 5 ■Q Ol «5 <>- r-. ■f^ -^ 1 ■-S -5^ V c^' in Oo V 5 (^ 4 Co §" 1 t2 1 1 i ►2 6o KINKS ON COST FINDING to some manufacturers, but 6 per cent, must be allowed for money invested on buildings, and machinery, etc. As the life of a machine is but ten years, 4 per cent, is not too high for wear and tear of machinery. If the machines are in good shape at the end of the ten years so much the better for the manufacturer. The following statement shows the various items of cost for a period of 4 weeks: Fixed Charges Interest and depreciation, 10 per cent, on $40,000 per year $307.69 Steam : Engineer and fireman . . . $48 . 00 Watchman 36 . 00 60 tons coal, $2.00 120.00 204.00 Superintendent 200.00 Bookkeeper 48 . 00 Office supplies 10 . 00 Knitter 72 . 00 Forewoman 30 . 00 Dyer 72 . 00 Teamster 40 . 00 House 18.00 Insurance 50.00 Finisher 60 . 00 Total fixed charges $1,111.69 Add 10 per cent 111.17 $1,222.86 Wages : Machinist $48 . 00 Knitter's helper 40 . 00 Ribbers 100.00 Amount forward $188.00 KINKS ON COST FINDING 6 1 Amount brought forward $1,222.86 Amount forward $188.00 Knitting and setting on . 432 . 00 Loopers 216.00 Examiner 16.00 Menders 77 . 00 Dyehouse help 36 . 00 Boarding 108.00 Finishing room 73 . 60 Helper 30.00 $1,176.60 Material and Supplies : Yarns $2,360.00 Needles 25.00 Belts 20.00 Lights 6.00 Pasteboard boxes 216.00 Cases 43.20 Bands and tables 30 . 00 Dyes, etc 288.00 Freight 56 . 70 ^ $3,054.90 Total cost 7,200 dozen $5,454.36 The average cost for one month's production is consequently 75 K cents per dozen. There are 5 dozen of seconds to each 100 dozen manu- factured, or 360 dozen a month, leaving 6,840 dozen firsts. The firsts sell at $1.00 a dozen less 10 per cent, commission and 2 per cent, to the customer, or 12 per cent, on the selling price. The seconds sell at 85 cents a dozen less 10 and 2 per cent. The 6,840 dozen at $1.00, less the 12 per cent, for commission and discount, gives a total of $6,029.20. The 360 62 KINKS ON COST FINDING ^ T ^ C5 c? ^ -§ v» >>J r •*i!:* ■I i ^s. ^ ^ * ^ Cvi o > 6^ "IN 1 ^ ■>( SI 5^ <: •5;^ §• ■^ 5| ii 1^ ^ ■^•^ »c .n ^ ^Q ~«» 1 5? 1 1^ 1 1 l£ +; ^ 15 1(5 KINKS ON COST FINDING 63 dozen seconds at 85 cents a dozen, less the com- mission and discount, gives a total of $269.28, a grand total of $6,298.48. The cost for manu- facturing is $5,454.36, leaving a profit of $844.12 on 7200 dozen for one month's work, or 11 72-100 cents a dozen. Menders Name Dozens Weekly Total M r w T F s ^>UUJl < pounds for splicing yarn, for the day's run. The knitter reports how many dozens knit and the ^ ^ ^^ ^ ^1 t? ^ s >- 'S ^ « ^ •K k CO . 1 5 g ^ o o 1 >> =a. Q> S ^ :3 ^ 5: o ^ .1 Q: V .s Da^ No of airls Hours Rate Total Dozens Paired Doi 5/zes Total 3 5 5i 6 6i 7 n 8 9 5 5i 6 Mon. ^ cf.0 0] Z 80 ^ 10 1 f 10 10 10 10 Itrn Tues. Wed. Thur Fri. Sat WeeklyTofal Report Week ending J.a^r:i<.. . 1.1 190 Y. ded Dois. Stamped H Boxed u ■ ■ Dozens Shipped Total Sizes Total 5/zes Total 9 s 5i u 6i 7 71 a 9 5 5i 6 & 7 « 6 9 KINKS ON COST FINDING 65 weight of the goods. Here we find the difference between the yarn sent to him and the weight of the goods received, also how much yarn he has in stock, if any. Boarding Room Name Day Sizes — Dozens Daily Total 5- ^i .6 6i 7 7i s 6i 9 9i 10 W'^Uj^LXl Man. 10 5- // 50 10 n Tuts VYed Thur Fri 5 at Weekly Total Looping and mending are piece work. From the looping and mending the goods are sent to the dye house in lots of 100 pounds each. Each lot requires: 8 lbs. aniline salts at 10c 2 1^ lbs. chlorate of soda at 10c 1 lb. bluestone If a blue bottom is put on it will take 1 lb. of dye at 5 lbs. bichromate of soda at 6Xc 3 lbs. oil of vitriol at 1 per cent 1 qt. olive oil 3 lbs. sal soda 2 lbs. soap at 5c $0 . 80 .25 .06 .70 .32K .04^ ,20 ,03 ,10 Total per 100 lbs. or 3X cents a dozen. $2.51 66 KINKS ON COST FINDING Si ■i-mioamoi 1 '■idnc, 1 i jadddjfoog e ^ S Buiddiif^ t5 § s 5uiSS9Jd ? a § Buiifsiutj 5 ^ 6uipjpog 5 ^ dsnoifd^Q 1 J94SUJD3± IS E 4Siuiif?Pi^ ^ ^ § ^ SJ9pU9l^ e ^ ^ SJ3jdAO^ n SJdddqi a to 5 J 3d 001 1. 1 SJ94ilU^ 5 & g SJduiujoxg 1 sJdffno sjdqqi^ UDW9JIJ nuDwqo4bM 5^ Jd3SJ9A0 Buiuiu)i e ^ 1 Two Weeks Ending <0 KINKS ON COST FINDING 67 s6ajaA\/ IDJ.01 — 4^ 4dng Jdda^ipog duiddi^Q Buissajj Buit^siu/j duipjDoq dsnoi{d^(j JdlSWOdl 4.SIU/l/DVl^ sjgpudi^ 12 SJsddqi SJddooj SJ9U(U)I SJ9UIUI0K3 ■3 SJd44no s fJdqqi^ 6 UDUJdJIJ Jdd^JdAQ BuiufU)/ r^ '^ i. 68 KINKS ON COST FINDING "T^ "? ^~' ""~ ""~ -"■ ■— ■— 1 — [— J ^ c^ iii ■^ ft ^ 4 »^ f^ .a so o\ N « c^ ^ ^ 1 eo ^ •3- 1 1 ^ vS •s- «<\ <5 ^ N ^ ^ ^ <^ ^ cs CH 1 as ■g 1 j 1 1 1 1 1 1 1 1 KINKS ON COST FINDING 69 The boarding is piece work and under the control of the finisher. It is left to him to get the goods out of the boarding room — 300 dozen per day as his report will show. In the finishing room the daily production will vary widely as some days there will be over 500 dozen shipped and the next day but 200 dozen, but for the month it will average the 300 dozen per day. The finisher reports how many dozens are shipped each day, how many dozens paired, folded, stamped, and boxed, and what sizes he is short of. The accompanying report sheets can be used and handed each day to the superintendent for inspection. By keeping track of these reports he can tell each day the average production and cost. Ravenswood. Estimating the Cost of Hosiery in a Mill with Yarn Plant It is part of my work to estimate the cost of our hosiery and I am looking for forms and report blanks to be used in the different depart- ments to give the supplies used, the production, and to keep track of the waste made. I also want record sheet and cost sheet combined. Morcombe (1793). To estimate the cost of manufacturing ac- curately and intelligently is of vast importance to every mill. It is essential that every article used extensively in the process of manufacturing should have a separate account, such as oil, 70 KINKS ON COST FINDING paper, boxes, nails, twine, needles, machine supplies for carding, spinning, winding and knitting rooms, yarn and raw stock, soap, dyes, Coal Report, week ending ,19 Monday DUST SOFT Tuesday Wednesday Thursday Friday Saturday Sunday Total Rkmarks: Engineer Fig. I lighting, coal, water rates, labor, repairs, freight and express, insurance, cases, taxes, rent, printing, office supplies, etc. This may seem to be making too many accounts, but it should be KINKS ON COST FINDING 71 remembered that in finding the cost of stockings per dozen all these things have to be taken into consideration. For example, if the machinery supply account should be kept as a general account and should run high one month it would be difficult to determine in which room this cost inci eased, and it would be necessary to check up each item Lapper Room Report 19 1 Day Bales Opened Total Lbs Tare Lbs Lbs Waste Mon Tues Wed Thur Fri 5at Total Fig. 2 to locate the cause. In keeping accounts for each room the location of this cause can be determined easily and the foreman in charge of the room notified that the expenses of his room are too high. The coal account cannot be watched too carefully. It is a good plan for the fireman to weigh his coal every day, and in most mills he has plenty of time for this work. I have seen this plan tried with good results, and the coal 72 KINKS ON COST FINDING bill reduced one-eighth. The scales can be sunk in the floor of the boiler room. The weight of the coal for each day should be put on the report card, Fig. 1, and the report sent to the office once a week. When the engineer is required to send these reports to the office he will do his best to make the quantity of coal consumed as Knitting Room Report 19. Day Doz Knix LBS Waste Needles Brokeh Mon lues Wed Thur Fri Sat Total Fig. 3 small as possible. This is a large item in the cost per dozen. Economy in buying and using supplies is very essential. A system that will increase the care and attention of the employes and insure a saving is very important. The orders for supplies should be placed by one person. It is hardly necessary to say that goods received should be checked up with the bill. A strict account of the needles KINKS ON COST FINDING 73 O Q 01 ^ if on "5 J 08 ?0 03 1° 8o KINKS ON COST FINDING of the total estimate should be added for inci- dental expenses such as stationery, postage, loss, repairs, etc. By deducting the trade discount and the commission from the selling price the net yield of the goods to the mill is found, and the difference between th'at and the estimated cost gives the estimated profit. A blank for estimating the cost of underwear is shown in the accompanying illustration. The items would have to be changed to suit the requirements of different mills and different kinds of goods. Those given are for spring needle work. Daniel Lighthill. Cost of Manufacturing Women's Hosiery Is it possible to make ladies' 176-needle hose at sixty-five cents a dozen so to yield a profit to the manufacturer? Henderson (1798). The cost of manufacturing this grade of goods depends largely upon the location. It is a well known fact that Southern mills have a great advantage over their Northern competitors on the cheaper grades of hosiery owing to the cheap labor which is available in the South. Especially does this hold true in ladies' plain knit coarse and medium gauge hosiery as this grade of work requires no great amount of skill on the part of the workers. On first thought one might be led to believe that owing to the cheapness of labor and also to its being the KINKS ON COST FINDING 8 1 center of the cotton growing industry the South would naturally be the most advantageous location for the manufacture of hosiery How- ever, such is not the case for the reason that there are certain grades of hosiery which re- quire skilled help for their successful manufacture and the class of help available throughout the Southern States does not seem to be able to reach that degree of perfection which is required tor the successful manufacture of high grade -hosiery such as fine ribbed and full fashioned goods. For this reason we find a large majority of the Southern manufacturers confining ' their efforts to the manufacture of men's coarse half hose coarse ribbed goods and ladies' plain knit seamless goods. And in this line of goods they certainly have a great advantage over the manufacturers throughout the East and Middle- West. It might be possible for a Southern mill to manufacture such a hose as the sample sent me, at 65 cents per dozen, but the margin of profit would be very small. However I do not hesitate to say that the goods cannot be manufactured in the Northern mills at a profit a sertio'rr ^" '°^^"- ^^ ^^^ '^ P^ove my of such, i '"'•^""^ '° ^'^' ^^^ absolute cost of such a hose in our mill, and as our prices are practically the same as the prices gener'a Itypa d throughout the East and Middle West I feel reasonably sure that I can show that the goods cannot be manufactured and sold at 65 cents per dozen at a profit. After carefully exan^ 82 KINKS ON COST FINDING ining the sample sent me I find it to be made from 1-16 carded peeler yarn, and to weigh \yi pounds per dozen. We are at the present time manufacturing a similar hose and I quote below the actual cost of these goods at the present time as follows: Yarn, 1% lbs $0 . 28 • Waste, 3 oz 05 Knitting 02 Cutting 005 Turning (4 times) 025 Looping 04 Hemming 015 Mending and inspecting 02 Dyeing 07 Forming , 03 Pressing 015 Mating 02 Stamping, ticketing, folding, ty- ing, boxing 015 Paper box 02 Seconds 03 Selling 035 Superintendent and handling . . .07 ! General or mill expense 22 \ « Total cost $0 . 98 In the item superintending and handling is included the salaries of all the overseers and wages of all day workers throughout the mill. Also in the item general expense is included the following items of expense which must necessarily be included to obtain the exact •cost of goods: Office salaries, depreciation and interest, taxes, repairs, profit ~and loss, insurance, KINKS ON COST FINDING 83 discount, needles, lights, power, fuel, oil, office and gsneral supplies, freight and express, advertising, miscellaneous items The general expense in our mill as based on above items figures 22 cents per dozen. Of course it is possible to reduce this expense con- siderably in small mills, where no high salaries are paid, and where taxes are low and fuel cheap. However, if this item was to be cut in half and allowing only 1 1 cents per dozen as the general or mill expense (which is an extremely low figure for any mill), we still have the actual cost of goods at 87 cents per dozen. There may also be other items of expense that might possibly be eliminated, such as selling expense, stamping, boxing, etc. But even with these items eliminated it would be impossible to reduce the cost below 80 cents per dozen. From these figures I think I have shown con- clusively that this grade of goods cannot be manufactured at a profit at 65 cents per dozen either throughout the East or Middle West. However, I do not wish to say that these goods were not manufactured in the East, as certain manufacturers have been accustomed to putting goods on the market at considerably below the actual cost of same to be used as a leader or rather a bait to induce customers to buy the other numbers in their line which show a good margin of profit. They figure that the customer can be made to believe that the prices on the 84 KINKS ON COST FINDING whole line must also be right, and in this they are undoubtedly right, to some extent at least. There are also other advantages to be derived in putting out a leader at a very low price at times, as it also helps to keep the machinery busy during the dull season, and prevents the accumulation of a large stock of the higher priced lines, thus doing away with the possibility of being forced to close down the mill indefinitely owing to overstock. It also lessens the gsn- eral mill expense on all the goods as the more machines in operation the greater the production, and the greater the production the less the general expense per dozen and vice versa. So in this case these goods may have been put on the market as a leader, or the manufacturer may be overstocked and in order to reduce his stock has cut the price accordingly. As a matter of fact there has been a great change in the hosiery industry in the past two or three years, inasmuch as the merchant has forced the manufacturer to carry the stock instead of carrying it himself as in former years. During the dull times we have experienced during the past two years, the merchant has been very cautious in placing his orders and has resorted to ordering his goods in small lots just as he wants them and reordering when his stock runs too low. In this way he has forced the manufacturers to carry a large stock in order to take care of these immediate orders, with the result that many manufacturers have ac- KINKS ON COST FINDING 85 cumulated a large stock which requires a large amount of capital, and some of the less favored manufacturers have been forced to reduce their prices in order to reduce their stock, or keep from shutting- down their plants indefinitely. After careful consideration I arrived at the following conclusions, viz: First, that the goods in question were manufactured in the South by cheap labor, or second, that they are being sold below cost and used as a leader, or third, the manufacturer found it necessary to move the surplus stock regardless of cost, or fourth, that the manufacturer placing them on the market does not know what the goods actually cost him, and finally, that the goods cannot be manufactured under any conditions and sold at 65 cents per dozen at a profit. Merrill. Cost of 188-Needle Half Hose We are very much interested in the reply by ''Merrill" on the cost of 176-needle ladies' hose in your November issue. It seems to be very complete. We beheve many mills get their mill expense too low and do not figure any waste whatever. We would like to have "Mer- rill" figure the cost on 188-needle half hose made of mercerized Sea Island yarn costing 70 cents per pound, goods weighing 1 1^ pounds off the machine. Cooper, Wells & Co. The cost of any article will vary considerably, according to conditions in different mills. For example, the cost of labor may be much more 8^ KINKS ON COST FINDING in one locality than in another; or one mill may be better equipped than another. For this reason I will pay more attention to the system used for finding the cost than the exact cost of goods. I will give the exact cost, if I were to manufacture the goods at the mill where I am now and try to make the explanation of the system so clear that it can be applied to any mill. I shall first enumerate the different items of cost and then take up each item separately and show how the exact cost of each item may best be obtained. The different items in the cost of these goods are as follows: Yarn, 1^4 lbs., 70c. per lb $0,875 Waste, 2 oz., 70c. per lb 0875 Knitting tops, 50c. per 100 doz 005 Cutting tops, 25c. per 100 doz 0025 Picking on tops, 8c. per doz 08 Transferring tops, 5c. per doz 05 Turning goods (4 times), 25c. per 100 doz. .01 Looping, 4;^c. per doz 045 Mending and inspecting, 2c. per doz 02 Dyeing, 4c. per lb 05 Forming, 2/^c. per doz 025 Mating, 2c. per doz 02 Pressing, Ic. per doz 01 Stamping, ticketing, folding, tying and boxing, l>^c. per doz 015 Paper box, 2c 02 Seconds, 5 per cent 08 Superintending and handhng, 7c 07 General or mill expense, 22c. per doz. . . .22 Cost per doz., exclusive of selling. . $1 .685 KINKS ON COST FINDING 87 This is the cost of goods in our mill. Of these items we shall class the following as fixed, and which require no explanation aside from the fact that they^^^may differ from prices paid in other mills: Yarn. Knitting tops. Cutting tops. Picking on tops. > Transferring. Turning. Looping. Mending and inspecting. Forming. Pressing. Mating. Dyeing. Stamping, ticketing, folding, tying and boxing. We have then the following items which will require some explanation and which I think are the most important items in figuring the exact costs, and also the items which most manufacturers overlook in their costs: Waste. Seconds. Superintendence and handling. General mill expense. SelHng. Waste is a very important item, and I think but very few manufacturers know what it amounts to on the goods they manufacture. I have allowed 2 ounces per dozen for waste. As we do not manufacture an exact duplicate of the goods in question it was necessary for 88 KINKS ON COST FINDING me to take from our line a style as near as possible to this one in order to make the tests. I feel sure, however, that the figures aie as nearly- correct as it is possible to make them. In determining the amount of waste per dozen on any given style I weigh from 300 to 1,000 pounds of yarn, knit it up and follow the goods all through the mill until they are ready to dye. I then weigh the goods and count the number of dozen. The difference in the weight of the yarn and the weight of the finished goods before dyeing represents the amount 'of waste. From this we can easily calculate the amount of waste per dozen. I have known manufacturers in making tests of this kind to weigh only the waste as it comes from the machines. I have found this to be unsatisfactory as usually some of the waste is omitted or mislaid. In the 2 ounces of waste which I have figured in this cost is included all ravelings from toppers and loopers and all other waste from start to finish. I have allowed 5 per cent, for seconds. I have found this by actual test to be the average loss from seconds on goods of this grade. These figures may vary some in different mills, as the class of help and equipment of mill has much to do with the amount of second-^. In making the tests to determine the amount of seconds I take 1,000 dozen of the goods just as they come from the machines and follow them through the mill, marking all tags special. After the goods are all mated and boxed they KINKS ON COST FINDING 89 are counted and the difference between the boxed goods and the 1,000 dozen which started from the knitting department represents the seconds. The seconds will usually average from 4 to 8 per cent, for the entire year. Anything below 6 per cent, is considered a good result. Under the head of superintendence and handling is included all day workers throughout the mill, including superintendent, foreman, office help and machinists, but not including the salesman. To find the exact cost per ounce for this item it is necessary to take an entire year's business. Keep an account of the exact number of dozen manufactured during the year, also the amount paid to day workers during the same length of time. From these figures we can easily calculate the cost for superintending and handling per dozen. This item will vary in different mills. It runs much higher in small mills than in those with a large production. We now come to the item of general mill expense. In this is included taxes, repairs, insurance, profit and loss, discount, needles, lights, power, fuel, oil, office supplies, adver- tising, freight, express, depreciation, interest, and miscellaneous expense. Of all the items in the cost of manufacturing any article, this is the most important and also the most difficult to estimate correctly. The only sure way in which to get the correct cost for this item is to figure on a year's production, as for super- intending and handling. Very few manufac- go KINKS ON COST FINDING turers know what their mill expense actually is. If they did they would not wonder so much as to what became of the expected profits "which failed to materialize." This item is also sub- ject to considerable variation according to conditions. We now come to the selling expenses, which are not included in the cost of the goods, owing to the wide variation between different mills. Most mills selling direct, pay a certain per- centags of the selling price for selling. In such cases the cost of same is easily found. In mills paying their salesmen straight salaries, the cost of selling may be included under superintf^nding and handling, or may be figured separately, basing the calculation on a year's business. This practically completes the total cost of the goods. As I stated before, while this represents the exact cost of goods if we were to manu- facture them in our mill, it is subject to consider- able variation in other mills. By substituting the respective prices for mine the exact cost may be obtained for any given mill. Merrill. I N 13EX PAGE Accounts of Supplies 69 Actual Expense of Manufacture 8 Administrative Expenses 17 Advantages of Cost System 12 Advantages of Keeping Account of Supplies 71 Allowance for Seconds 88 Allowance for Waste 78 Analysis of Cost Statement of Hosiery 82, 86 Analysis of Statement 19 An Order and Cost System for an Underwear Mill 23 Applying Indirect Expenses 14 Batches, Form for 25 Boarding Room Report 65 Bookkeeping Forms 43, 45 Broken Needle Report 72 Change in Hosiery Industry 84 Charging Indirect Expenses 12 Classification of Departments 6, 15 Classification of Products 16 Coal Report 70 Condition Disclosed by Accurate Cost System 20 Cost Accounting for Knitting Mills 11 Cost Estimates for an Underwear Mill 50 Cost of Dyeing 9, 65 Cost of Finishing 52 Cost of Handling Stock 42 Cost of Manufacturing 200-Needle Half Hose 5,9 Cost of Manufacturing Women's Hosiery 80 Cost of 188-Needle Half Hose 85 Cost of Underwear, Estimate of 78 Cost of Yarn 22, 53 Cost Records 12 Cost System for an Underwear Mill 23 Criticism of Methods of Charging Indirect Expenses. 12, 14 Cutting Room Form 32, 34 Daily Account 63 Daily Record of Goods Finished 38 Decreased Production, Effect on Cost 13 Defective Work, Amount of 49 Defective Work, Effect of Wage Systems on 48 Depreciation. Allowance for 58 Determining Amount of Waste 88 Dry Room, Form for 39 Dyehouse Report 62 91 92 INDEX PAGE Dyeing, Cost of 10 Dyeing Hosiery 65 Dyeing, System used in 30 Effect of Production on Cost 51 Efficiency of Machinery 13 Estimate Blank for Underwear 79 Estimate of Cost in Underwear Mill 50 Estimate of Materials for Underwear 56 Estimating Cost of Fleece Lined Underwear 55 Estimating Cost of Hosiery 57 Estimating Cost of Hosiery in Mill with Yarn Plant. . . .69 Estimating Cost of 200-Needle Half Hose 5 Estimating Cost of Knit Underwear 78 Estimating Cost of Liglit Weight Underwear 56 Examining lor Seconds 36 Expense of Selling 10 Finishing, Cost of 52 Finishing Room, Form for 35 Finisliing Room Report 64-65 Fixed (Charges, Distributing 78 Fixed Cliarges, Form for 76 Fixed Charges in Hosiery Mill 60 Fixed Charges in Underwear Mill 51, 54 Fleece Lined Underwear, l^stimating Cost of 55 Form for Batches 25 Form for Boarding Room 65 Form for Cloth Knit 31 Form for Coal Report 70 Form for Cutting Room 32, 34 Form for Dry Room 39 Form for Dye House Reiiort 62 Form for Finishing Room 35 Form for Fixed Charges, Supplies, etc 76 Form for Goods Finished 38 f^orm for Knitting Room 29, 59, 72 Form for Lapper Room Report 71 Form for Looping 58 Form for Menders 63 Form for Mixing and Picker Room 27 Form for Needles Used 58 Form for Office Sheet Daily Report 68 Form for Payroll 41, 66 Form for Payroll Average Sheet 67 Form for Record and Cost 77 Forms for R»^i)orts of Departments in Hosiery .Mill 56 Form for Report of Finishing Room 64, 65 Form for Shii)])ing Room 37, 64 Form for Spinning Room 28 Form for Stock Received 24 Form for Stock Received and Used 42 Form for Siuumarv of Business 43 General Exi)ense ." 6, 16, S3, S9 INDEX 93 I'AGE Goods Fiiiislied, Form for 38 Half Hose, Cost of Manufacturing 5,9 Half Hose, Cost of 18S-Needle 85 Hosiery, Cost of, in Mill with Yarn Plant 69 Hosiery, Cost of Women's 176-Needle 80 Hosiery, Estimating Cost of 57 Hosiery Mill, Reports in 56 Incidental Expenses 80 Indirect Expenses 12, 14, 16 Inspecting and Mending 50 Interest on Investment 58 Invoice Form 46 Items of Expense 6 Knitting Report 59, 72 Knitting Room, Form for 29 Labor Account 75 Labor, Consideration of 80 Lapper Room Report 71 "Leader," Use of Line for 84 Light Weight Underwear, Estimating Cost of 56 Lines for "Leaders." 83 Locating Machine Making Poor Cloth 30 Looping, Form for 58 Machinery, Capital Invested in 53 Making up Shortage 33 Menders, Report of 63 Mending anrJ Inspecting 50 Mill Expense 11 Miscellaneous Items 8 Mixing and Picker Room Form 27 Necessary Waste 30 Needles, Form for 58 Office Sheet Daily Report 68 Orders for Supplies 72 Overhead Charges — See Indirect Expenses 12, 14, 16 Payroll Average Sheet 67 Payroll Form 41 Payroll Sheet 66 Premium System of Paying Wages 48 Production, Eflect on Cost 5, 13, 51, 84 Profit and Loss Statement ■ ' . ' 18 Record of Cloth Knit . 30 Records of Stock Received and Used 42 Reports of Departments in Hosiery Mill 56 Report of Dyehouse 62 Report of Knitting 59 Sample Record and Cost Sheet 77 Seconds 61, 88 Seconds, Quantity of '.58 Selling Expense 10 17 90 Shipping Room Report '. 37' 64 Shortage, Making up '.33 94 INDEX PAGE Spinning Room Form 28 Statement of Profit and Loss 18 Stock Received, Form for 24 Summary, Form for 43 Superintendent's Order Form 25 Supplies, Form for 76 Supplies, Handling 72 Supply Accounts 69 System Used in Washing and Dyeing 30 Tabulating Costs, Reason for 12 Time Records 13 Underwear Mill, Cost Estimates in 50 Underwear Mill, System for 23 Unnecessary Waste 32 Use of Cost Accounting 11 Use of Forms 26 Value of Cost System 12, 21 Variation in Cost 85 Wages in Hosiery Mill 60 Wage Systems 75 Wage Systems and Defective Work 48 Waste, Allowance for 78, 87 Waste, Figuring 53 Waste in Cutting 30 Waste in Knitting 22 Waste, Necessary and Unnecessary 30, 32 Waste Records 71, 72, 73 Women's Hosiery, Cost of 80 Yarn, Cost of 22, 53 Yarn for Goods 7 STAFFORD & HOLT MANUFACTURERS OF AUTOMATIC CIRCULAR RIB KNITTING MACHINERY UNDERWEAR, SWEATER, BORDER, SLEEVE. TUFTING, NAPPING MACHINES, ETC. LITTLE FALLS. NEW YORK DO YOU HAVE TROUBLE IN YOUR CUTTING ROOM? IF SO, READ THIS! The EASTMAN MACHINE COMPANY, a few years ago, set out to solve the problem of producing a cutting machine for the knit goods trade, which would overcome the various defects found in other methods. Success has attended our efforts, and we have on the market today a machine which will cut with an accuracy and speed impossible to obtain by any other means. We are handling lays from three to ten inches, and producing absolute uniformity throughout the entire lay, top, center and bottom — it makes no difference where — each and all perfect. No matter what your line may be, we can help you; whether you make the cheapest goods or the most ex- pensive the "EASTMAN" is a moneysaver for you. Below are some of the firms that have endorsed the "EASTMAN" and our methods by installing them. HARVARD MILLS Wakefield, Mass. OTIS COMPANY . . . Ware. Mass. ROOT MFG. CO. . . . Cohoes, N. Y. UTICA KNITTING MILLS . Utica. N. Y. L. E. HARROWER . . Amsterdam. N. Y. ONEITA KNITTING MILLS Utica. N. Y. PERRY KNITTING CO. . Perry, N. Y. CHALMERS KNITTING CO. Amsterdam, N. Y. Wh}) not send for that machine we are willing to put in on free trial for you? A postal card will bring full particulars. Eastman Machine Co. Washington and Goodell Sts., BUFFALO, N. Y. It LAMB Most widely used ; being operated in every civilized country in the world. For description, prices, etc., see catalogue. : : : Original and Still the Best LEADER OF KNITTERS CIRCULAR MACHINES RIB TOP and SEAMING MACHINES Lamb Knitting Machine Co. p. O. Box 5888 CHICOPEE FALLS, : MASSACHUSETTS J. E. WOODHEAD, 124 E. 22d Street, Chicago L. D. SANBORN, Room 513, Wool Exchange, New York Books that will help you in the mill There is nothing that helps a mill man so much as reading the right kind of textile books. We can supply you with any book on textile subjects ; we probably have it in stock. Send for descriptive catalog, or better yet, call at our office and see the books. Lord & Nagle Company Boston, Mass. How much of your power is slipping away? 600 Pulleys are being equipped with CORK INSERTS (Patented) by a prominent Stocking: Manufacturer The constant power thus secured for each machine will enable him to get better product and more of it. Cork Inserts eliminate belt slipping, greatly increase power transmission, lessen belt tension, reduce the wear on the bearings, and are not affected by dust, oil, water, or atmospheric conditions. Wood Rim (Iron Arm and Hub), Cast Iron and Steel Pulleys, equipped with Cork Inserts, can be had at reasonable prices. Send for booklet showing 80 applications National Brake & Clutcli Co. 16 STATE STREET BOSTON, MASS. The Grosser Knitting Machine Co» MAX NYDEGGER 260 w. Broadway, new york Imported Knitting Machinery OF ALL SPECIAL TYPES IS MY LINE I am familiar with all details concerning Grosser Flat Knitting Machines run by hand Grosser Fully Automatic Power Machines rillscher Full Fashioning Hosiery Machines Hllscher Underwear and Sweater Machines Hilscner Rib Top Frames (Cotton's and French type) BarfuSS Warp Knitting Machines Terrot Circular Spring Needle Frames. Stoll Pearl Stitch or Links-Links Machines And do know a thing or two about Koenler Loopers, Record I, Record 11 Koenler Sweater Overseamers Koenler Diamond Overseamers Koehler Ideal Machines and their application for special purposes. When at sea about lowering cost of pro- duction, When compelled to save on labor, When forced to go one better than your competitor, When considering new lines or modifica- tions in mill. When in need of new ideas, suggestions how to make best use of present equipment, When in need of practical advice of any kind bearing on Knitting Machinery, C O N S U LT The Grosser Knitting Machine Co* MAX NYDEGGER 260 WEST BROADWAY, NEW YORK '*THE BANNER" Hemphiirs Latest A FULL AUTOMATIC MACHINE Specially adapted to Manufacture Hose with Linen or Mercerized heel or toe. Also for Plaited Goods and String Work High Splice and Double Sole Largest Production More Yarn Changes Highest Speed Simplest Least Repairs Produces a Superior Quality of Work MANUFACTURED BY THE Hemphill Mfg. Co. 131 Clay Street PAWTUCKET, R. L WILDMAN MACHINERY Provides Valuable KINKS FOR Knitters and Mill Managers by means of Increased Production, Superior Fabric, New Effects, and Reliable Operation WiLDMAN Mfg. Co. Circular Rib Knitting Machinery One copy del. to Cat. Div. U.S.A. LIBRARY OF CONGRESS