THE ARTHUR YOUNG ACCOUNTING COLLECTION Graduate School of Business Administration Library of the University of California Los Angeles ow. UNivERsrr o^m, LOS A[\ Library Gfraduate School of Bw- ' --^p. ^ministration Vii'i '"^rr ■■ ' - ' ■' f;' rnia IfOS Angeles 24, California DEPARTMENT STORE STATISTICS DEPARTMENT STORE STATISTICS WITH THE AID OF THE SLIDE RULE By ROBERT B. SCHREFFLER DEPARTMENT STORE EFFICIENCY ENGINEER Published "By ROBERT B. SCHREFFLER 215 S. Market Street Chicago, 111. Copyright 1914 Robert B. Schreffler THE DUBOIS PRESS W ROCHESTER, N. Y. Bm. Admin. Libra rv TO MY SON ROBERT PREFACE IN offering this volume to Department Store Accountants, and Accountants in general, I feel that it will, in a measure, supply a long felt want. The growth of compe- tition during the last decade, requires that Retail Business, to be successful, must be transacted on a more scientific basis, and that the General Manager and other executives, be presented with the facts in a concise and understandable form while they will do the most good, and before they become ancient history. In preparing these chapters, I have had in mind two things : 1. The presentation of highly satisfactory speci- mens of reports which are in actual use by some of the most successful stores, with full explana- tions concerning the preparation of them. 2. To describe an instrument which I have used to great advantage, in preparing such reports for a number of years, to perform all calculations involving the principles of multiplication and division, and one which I have successfully taught to my clients in various stores, — the Slide Rule. In order that the reader might get a clear understanding of the use of the Slide Rule for performing the calculations described, the first chapters have been devoted to General Instructions for the use of it, together with a number of problems for practice. The Scales, C and D, which will be found in the pocket at the back of the book are to be used by the reader to practice the examples illustrated. The Scales are perfect and with them any of the problems may be solved. 8 PREFACE and although not quite so easily handled, all calculations may be performed as accurately with them as with a regular rule. Formulae are shown for working out all the calculations required by the forms illustrated. These are, by no means, exhaustive, but are submitted as a basis upon which the reader may build as occasion demands. The book is not intended to be a work on " bookkeeping " and as it being presupposed that a satisfactory method of keep- ing the original records is in force, all particulars relating to same have been omitted with the exception of the description of a simple and satisfactory method of recording Purchase Orders in the office and an outline of a highly approved method of handling the Freight Account. While these two do not deal, primarily, with Department Store Statistics, I feel that the book would not be complete, or nearly so helpful, without these chapters. Om^^^^U- /S So^i^^s^ffSL^-^ CONTENTS CHAPTER I. Introduction 15 General Uses of Slide Rule in Preparing Department Store Statistics. CHAPTER II. Description of Slide Rule and General Instructions for Operating 19 Logarithms and Logarithmic Scales Defined and Described — Primary, Secondary and Tertiary Divisions Explained — Instructions for Reading Values on the Rule — Multiplication, Division and Proportion Illustrated by Formulae and Drawings. CHAPTER III. The Decimal Point 33 Characteristics — Illustrations — Decimal Indicator. CHAPTER IV. Problems for Practice 37 These Problems Involve Principles Encountered Daily in Preparing Department Store Statistics. CHAPTER V. Pay Roll Statistics 39 Importance — Necessity for Frequent Checking — Census Reports — Indi- vidual Clerks' Records — Making Calculations on Basis of Salary Earned Instead of Salary Paid. CHAPTER VL Calculating Mark-Up and Percent of Mark-Up 59 Danger of Excessive Mark-Up — Determining Selling Prices — Purchase Records — Purchase Reports — Merchandise Stock Ledger. CHAPTER VII. Taking the Inventory 73 Right and Wrong Methods — Subdivision of Stock — Form of Sheet — Measuring and Counting — Preparing the Sheets — Listing — Goods Sold While Listing — Extending — Recapitulations. 10 CONTENTS CHAPTER VIII. Merchandising Statistics (preliminary) 83 Expense the Proper Basis — Preliminary Plans — Determining the Amount of Stock to Carry — Turnover Calculations — Purchases Allowed — Making Monthly Proportions. CHAPTER IX. Merchandising Statistics (weekly reports) 99 Reports For the General Manager — For the Buyers — Use of Reports to Speed Up Sales — Sales Comparisons — Purchase Reports Showing Amount Bought and Balance of Allotment — Weekly Turnover Comparison — Buy- ers' Weekly Statements. CHAPTER X. Distributing Expenses 115 Salary — Freight and Express — Advertising — Rent — Window Display — Insurance and Taxes — Department Expense — General Expense. CHAPTER XI. Purchase Order Record 131 Writing Purchase Orders — A Separate Book for Each Department — Use of Each Copy — Office Record — Distribution According to Date of Delivery — Cancellations — Weekly Report — When Date of Shipment is Changed. CHAPTER XII. Freight Account 139 Not an Expense Account — An Unexpired Charge — Instructions for Inau- gurating a Proper Accounting. LIST OF ILLUSTRATIONS ILLUSTRATION NO. PAGE 1. A Logarithmic Scale — Gunter's Rule 21 2. Scales C and D—Oughtred's Rule 23 3. Diagram of Scales and Indexes 24 4. Slide Rule Complete with Runner 25 5. Multiplication Illustrated 28 6. Division Illustrated 30 7. Proportion Illustrated — 2 Settings 30A 8. Decimal Indicator 36 9A. Weekly Census Report — Sales-help — Shoiving a comparison of Sales, Salaries, number of Employees in each department, and relative per- centages ivit/i preceding year 43 9B. Weekly Census Report — Dead-help — Shoin-ing comparison of Salaries, num- ber of Employees and percent of Sales iviih preceding year 44 10. Annual Comparison of Sales and Salaries, luith percent 47 11. Weekly Clerks' Sales Report — Shoiuing a comparison of the sales of each clerk in a department ivith percent and standing 48 12. Clerk's Individual Sales and Salary Record — Weekly Basis — Showing a Clerk's Sales, percent, and standing in department both weekly and cumulative for a six month period 50 13. Monthly Clerk's Sales Report — Showing a comparison of the Sales of each clerk in a department for a month ivith percent and standing 52 14. Clerk's Individual Sales and Salary Record. Monthly Basis — Showing Sales, percent, and standing in department both monthly and cumulative for one year 53 15. 16, 17, 18. Four positions of Rule set for calculating percent of a clerk's salary to the corresponding month's Sales on an exact basis 54A 19. Monthly Distribution of Department Salary — On basis of amount earned instead of amount paid 56 20. Checked Invoice — Showing how the retail price and extensions and the per- cent of Mark-Up are recorded 60 21. Comparison of Percent of Profit Based on Cost with Same Based on Retail. . 62 22. Purchase Report Showing Percent of Mark-Up Maintained. Compared with Standard Set 64 23. Columnar Purchase Record 66 24. Purchase Record — Unit System 68-69 12 LIST OF ILLUSTRATIONS ILLUSTRATION NO. PAGE 25. Merchandise Stock Ledger 70 26. Inventory Sheet for Taking Stock at Cost and Selling — Shoiu'tng method of entering and extending prices and reductions 76 27. Department Inventory Recapitulation 79 28. Store's Inventory Recapitulation 81 29. Six Months' Preliminary Merchandising Plans 84 30. Six Months' Preliminary Sales Plans 86 31. Six Months' Preliminary Stock Plans 88 32. Six Months' Preliminary Expense Plans 91 33. Advance Sales Summary for Merchandising Executives 100 34. Advance Sales Statement for Buyers 101 35. Buyers' Daily Sales Report 102 36. Daily Sales Comparison — All Departments 104 37. Weekly Sales and Reduction Comparison — for the current week, month, and season 104A 38. Weekly Purchase Report — S/iozving season's allotment, goods received, un- filled orders, and remaining purchasing poiver for each department. .. . 106 39. Weekly Comparison of Turnover 110 40. Weekly Merchandise Report for Buyers 113 41. Monthly Tabulation of Expenses 117 42. Freight Bill and Checked Delivery Receipt 118 43. Special Express Receipt 119 44. Distribution of Advertising 120 45. Diagram showing How to Calculate Rent for Each Department 124 46. Distribution of Rent 125 47. Distribution of Window Display 126 48. Distribution of Insurance and Taxes 127 49. Distribution of General Expense 129 50. Purchase Order Folder — Shoiving how distribution of orders may be kept according to month of delivery 132 51. File containing Purchase Order Folders 137 LIST OF FORMULAE FORMULA PAGE No. 1. Multiplication 28 No. 2. Division 30 No. 3. Proportion — One Setting 31 No. 4. Proportion — More than one Setting 31 No. 5. Continued Multiplication 36 No. 6. Calculating Salary Percentages 46 No. 7. Calculating Clerk's Monthly Salary Percentages on Basis of Amount Earned 54 No. 8. Converting Monthly Distribution of Salary Paid into Relative Distribu- tion of Salary Earned 57 No. 9. Adjusting Salary Distribution 58 No. 10. Calculating Percent of Mark-Up 61 No. 11. Finding Required Selling Price, Having Given the Required Percent of Mark-Up 63 No. 12. Same — Another Method 65 No. 13. To Find Required Sales, Having Given Expense, % Mark-Up, % Mark- Downs, and % Net Profit Desired 85 No. 14. Formula No. 13 Illustrated 85 No. 15. To Find Stock Justified, Having Given Sales, Days to Sell, and Days in Period 89 No. 16. Formula No. IS Illustrated 89 No. 17. To Find Expense Justified, Having Given Last Year's Expense and Increase or Decrease of Sales Plan from Sales Required 93 No. 18. Formula No. 17 Illustrated 93 No. 19. Formula No. 18 Illustrated 93 No. 20. Prorating Season's Plans According to Months in Period 96 No. 21. Formula No 20 Illustrated 96 No. 22. Calculating Percent of Expense to Sales 97 No. 23. Calculating Turnovers Ill No. 24. Distributing Advertising 121 No. 25. Distributing Advertising 121 No. 26. Distributing Advertising 122 No. 27. Distributing Advertising 122 No. 28. Distributing Insurance and Taxes 128 No. 29. Distributing General Expenses 130 CHAPTER I INTRODUCTION THE Slide Rule is defined as, " An instrument for the per- formance of addition and subtraction, which is con- verted into an instrument for the mechanical perform- ance of multiplication and division by the use of logarithmic scales instead of scales of equal parts." The first approach to this invention was by Edmund Gunter, professor at Gresham College in London about the year 1620. His rule, however, consisted of but one scale and calculations were made with the aid of compasses. In the year 1624, Edmund Wingate introduced Gunter's scale into France, at the same time publishing a book describ- ing its usage under the title, " Construction, Description, et Usage de la Regie Proportion." Two years later he followed this with the publication, also in France, of tables of logar- ithms under the title, " Arithmetique Logarithmetique." In 1645 he published in England under the title, "The Use of the Rule of Proportion," a translation of his French work of 1624. The slide is said to have been invented by Oughtred, an English divine and mathematician while he was still an undergraduate in King's College, Cambridge. He was a man who set little value upon instrumental aids unless in the hands of those who had previously learned sound principles, and for this reason was not personally responsible for the introduction of his invention to the public. In 1630, Oughtred showed his slide rule to his pupil, William Foster, who obtained his consent to translate and pub- lish his own description of the rule with instructions for using it. This was done in London in the year 1632, under the 16 DEPARTMENT STORE STATISTICS title, " The Circles of Proportion and the Horizontal Instru- ment." The cursor, or runner, was devised by Mannheim of the Paris Polytechnique in 1851. This runner enables the operator to find coinciding points on any of the scales with greater ease and also permits of successive calculations being worked out without the necessity of reading off the results. The Slide Rule, while being the oldest known mechanical instrument for performing mathematical operations involving the principles of multiplication and division, has not found general use outside of engineering circles. Accountants do not seem to realize its infinite value to them in calculating percentages, prorating expenses, and in working out other tedious complicated calculations or it would find a more com- mon use for commercial purposes. There is, perhaps, no other line of business that offers as wide a range of uses for the Slide Rule as the modern depart- ment store. The task of preparing the necessary daily, weekly, and monthly reports and statements, involving as they do, column after column of percentages, is stupendous and unless the store is fortunate enough to secure an expert math- ematician, often impossible. There is a general impression that it is difficult to acquire sufficient knowledge of the Slide Rule to make its use practical. The writer has taught a number of young men and women in different offices how to use the rule and has found it very easy, the time usually required being only two or three days. The ones who were fortunate enough to have had a high school edu- cation learned the principles very rapidly. While a knowl- edge of higher mathematics is essential in working out new formulae, great skill in solving the problems after the formulae have been developed may be easily attained, whether the operator is an advanced mathematician or not. INTRODUCTION 17 Frederick W. Taylor in his much quoted book on Scien- tific Management, has referred to the difiicult task which faced them in the steel industry in finding quick solutions to the problems relating to the effect of certain variables upon the cutting speed of metals. He states that it took a good mathematician by ordinary means, from two to six hours to solve one of these complicated mathematical problems and that the finding of a means of getting a quick solution to these problems was referred to one after another of the noted mathe- maticians of the country. Any reasonable fee was offered for a practical means of obtaining a rapid solution, but that not until after continuing the search irregularly over a period of fifteen years, was it discovered that the Slide Rule was a practical instrument for this purpose. By the aid of the Slide Rule, these problems could be solved in less than half a minute by a good mechanic whether he understood mathematics or not. In the writer's own experience, he has seen office clerks of ordinary ability prorate, on the basis of sales, an item of expense among forty-five, or more, departments and finish in less than twenty minutes, a task which in the ordinary way requires from one to two hours. It is easily possible to acquire a speed of seven items a minute in figuring percentages, thus in stores employing 400 clerks, the percent of salary for each can be computed in less than an hour after the sales and the salary for a corresponding period have been found. The only argument which any person has made against the use of the Slide Rule for performing these operations is, that accurate results beyond three or four places is impossible. The weakness of this argument is shown by the fact that de- partment store managers seldom care for these results beyond the third digit; to them, 35.S1259'« means 35.5% and 18 DEPARTMENT STORE STATISTICS t>.2i?>7% is considered only as 6.25%, and the carrying of the decimals beyond these points is of no practical value. The Slide Rule will give accurate results to three and sometimes four figures. It will enable the department store manager to get his reports much sooner than would be possible otherwise, and in a business which requires the vast amount of up-to-the-minute information which is demanded by the modern department store the Slide Rule cannot but be a most welcome addition to the mechanical accounting equipment. CHAPTER II DESCRIPTION OF SLIDE RULE AND GENER.AL INSTRUCTIONS FOR OPERATING AS the construction of the Slide Rule is based on the theory of logarithms, before beginning to study the operation of the rule, it will be best to first acquire some understanding of the fundamental principles of logarithms. Logarithms Defined Logarithms are the indexes of the ratios of numbers, one to the other. They are a series of artificial numbers used for expediting calculations and proceed in Arithmetical Progres- sion as the numbers they answer to, do in Geometrical Progres- sion. The addition and subtraction of logarithms answer for the multiplication and division of the numbers with which they correspond. Logarithms Illustrated If we take two series of numbers, the one forming an arithmetical progression and the other forming a geometrical progression, as follow^s: A. P.— 12 3 4 5 6 7 8 9 10 &c. G. P.— 1 2 4 8 16 32 64 128 256 512 1024 &c. and place the terms over each other in such a manner that in the arithmetical series corresponds with 1 in the geometrical series, we are better able to see the application of logarithms in performing calculations involving the principles of multipli- cation and division. 20 DEPARTMENT STORE STATISTICS Multiplication by Logarithms The sum of any two numbers in the given arithmetical series comes directly above the product of the corresponding terms in the geometrical series. Thus if the terms in the arithmetical series be 2 and 4, those in the geometrical series will be 4 and 16. Now 2 + 4 = 6; and 4X 16 = 64. By comparing these results with the series, we find that the pro- duct, 64, in the geometrical series is directly under the sum, 6, in the arithmetical series. Division by Logarithms The difference between any two terms in the arithmetical series comes directly above the quotient of the corresponding terms in the geometrical series. Thus, if the terms in the arithmetical series be 8 and 3, the terms in the geometrical series will be 256 and 8. Then 8 — 3 = 5 ; and 256 ^ 8 = 32. By comparing these results we find the quotient, 32, in the geo- metrical series, directly under the difference, 5, in the arith- metical series. Other Common Ratios While the common ratio in the preceding series is 2, the same principle will hold good for any ratio as will be seen in the following, where the common ratio is 5 : A. P.— 12 3 4 5 6 7 8 &c. G. P.— 1 5 25 125 625 3125 15625 78125 390625 &c. Logarithmic Scale Described Figure 1, here shown, is a logarithmic scale on which the radius AB may represent the logarithm 10, 100, 1,000, or 10,000, etc. When AB represents 100, then the points 1, 2, 3, DESCRIPTION OF SLIDE RULE 21 etc., will represent 10, 20, 30, etc.; when it represents 10,000, then the points 1, 2, 3, etc., will represent 1,000, 2,000, 3,000, etc., and the points 1>^, 2>^, 3>4, etc., will be 1,500, 2,500, 3,500, etc. 2 3 *' ^ U t t 9 f r r rrl ' 1 1 1 hiiiliiiiliiiiliiiiliiiiliiiiliiiiliiiiliiiiliiiiliiiLd^^^^^^ Figure l, A Logarithmic Scale Gunter's Scale Described Gunter's Scale is illustrated by Figure 1. You will see on this that the distance from 1 to 2 is the same length as the dis- tance from 2 to 4 or from 4 to 8 ; also that the distance from 1 to 3 is the same as that from 3 to 9. If you will now take a pair of compasses or a strip of paper and measure off the space from 1 to 2, then place one leg of the compasses on 2, you will find that the other will rest on 4, thereby obtaining, not the sum of 1 + 2, but the product of 2 X 2, which is 4. Thus also, if the space from 1 to 2 be joined, by the aid of the compasses, to the space from 1 to 4, the result will be the product of 2 X 4, which is 8. Likewise find the products of 2X5; 3X3; 2X3. Determining Values Now let the line AB represent 100, and the points 1, 2, 3, etc., 10, 20, 30, etc. Then 1.5 will represent 15 and joining this to the space from 1 to 2 you will obtain the result 300. But it is not necessary that the value of AB be uniform for both multiplicand and multiplier, and in the above illustration, if only 1.5, representing the multiplicand, is increased in value to be 15, and the multiplier is not accordingly increased but 22 DEPARTMENT STORE STATISTICS Still retains the value, 2, the result will be read 30 instead of 300. From this it will be seen that the divisions on the scale may be increased or decreased in value, according to the requirements of the problem, by the mere shifting of the decimal point to the right or left, or by annexing ciphers. Examples for Practice Multiply 15 by 3; IS by 4; 25 by 4; 35 by 2. Dividing with Gunter's Scale In the beginning of this chapter, it was stated that the addition and subtraction of logarithms answers for the multi- plication and division of the numbers with which they corres- pond. In the preceding examples we have seen how, by add- ing the spaces on the logarithmic scale, we obtained results agreeing with the products of the numbers represented by these spaces. Hence it follows that if we are to subtract any of these spaces, we will obtain the quotient of the numbers repre- sented. To divide 45 by 3, w^e first measure off the distance from 1 to 3, which is our divisor; then placing one leg of the compasses on the point 4.5, we find the other leg resting on 1.5, but as the value 45 was assigned to the point 4.5, the result will be read 15. Examples for Practice Divide 75 by 3; 75 by 5; 90 by 45 ; 70 by 35. DESCRIPTION OF SLIDE RULE 23 The Slide History tells us that the next step toward the production of the modern Slide Rule was made when Oughtred substi- tuted for the compasses, another rule, or slide, with gradua- tions along the edge to correspond with the graduations on the other. An example of such a combination is shown in Figure 2. ^ I 1- r r r r r r r rl 1 iiiriiiiliiuriiiMiiiniiiiiiitiiiiliiiiliiiiliiiiriiiiiiiiyiiiW D 1 L L L 1. L 1. UL iiii[iiiiiiiii[iiii iiiipi{i|iiiiyiii|iiii|iiiiiiip|iiipq l^r^rljiv^. WiMj^ Figure 2, Scales C and D Scales C and D In order to distinguish between these two scales in our description, we will call the upper one Scale C and the lower. Scale D. In the illustration, the " left index," on Scale C, is set to coincide with the point 2, on Scale D. Operating With the Slide If, to the distance from 1 to 2 on Scale D, we add the dis- tance from 1 to 2 on Scale C, we find coinciding with the point 2, on Scale C, the point 4 on Scale D, and this is the product of 2X2. Likewise we find that all numbers represented on Scale D are twice the coinciding numbers on Scale C. We also find that if from, the distance from 1 to 4 on Scale D, we subtract the distance from 1 to 2 on Scale C, we have left on Scale D, the distance from 1 to 2, and the point 1 on Scale C coincides with the point 2 on Scale D ; from this we discover the principle of division. Having two rules instead of one, is 24 DEPARTMENT STORE STATISTICS a great deal more convenient and does away with the necessity of using compasses in making calculations. By building one of these parts larger than the other and providing it with a groove into which the smaller part is accurately fitted, so that it may be easily moved from right to left or from left to right, these two parts were more conven- iently handled. The smaller part which fits in the groove is called the " Slide." Other Scales In addition to Scales C and D illustrated in Figure 2, Slide Rules are fitted with other scales, A and B. The gradu- ations on Scales A and B are so much closer together that two complete scales are placed end to end in the same space that is occupied by either Scale C or D. The square, therefore, of any number found on Scale D will be found at the coinciding point on Scale A, and the square root of any of the numbers found on Scale A will be found directly under on Scale D. Left Index \ Middle Index 1- Right Index I 3 |ll ll | l l l l| ll l l | llll |l il l |l lil( l l i |l ! ! lll|l|l|l |^ SfHr !!lljl | l | l|l| l |l|i|l|iil|l|lil|l | l|l | l|lii[ljlii|i P^ ^ ^ iiiilmilHiJiiiilji.il! i iii iliii i ! i | ii mlt! ii i>i i i| i ll| P l ff l p !l ll|III M IIII|^^ -JOrtrlSKrWi i | l ||l | l | t| | i| : i I I I I J Left Index Figure 3, Diagram of Scales and Indexes Right Index Indexes Figure 3 is an illustration of the complete Slide Rule showing Scales A, B, C, and D, with Right, Left, and Middle Indexes indicated, and Figure 4 shows the Slide Rule equipped with the Runner. The student should thoroughly familiarize himself with the terms, runner, index, and slide. DESCRIPTION OF SLIDE RULE 25 Divisions of Scales Carefully examine the spaces on Scales C and D. It will be found that each of the prime divisions 1, 2, 3, etc., are again divided into ten parts; these are the secondary divisions. Between the prime divisions 1 and 2, the secondary divisions are divided into ten smaller divisions, from 2 to 4 into five smaller divisions, and from 4 to the Right Index into two smaller divisions. These divisions of the secondary parts are called tertiary divisions. ■KasssB^^Bais^aaas 4ljj['°jTli;li[i|fflijia>l[ i'i| i l|iliiliildi'i|i |f iil]' ip ^ [ / |li ii ]wi|w i w| i a)| ii j i i i faM| ii U4'W"'' ^ ^ « • J J J J J iKtUfreL»tSSERC«. K.Y.» Figure 4, Slide Rule Complete with Runner Arbitrary Value of Figures on Slide Rule In the beginning of the chapter, it was stated that Logar- ithms are a series of arbitrary numbers used for expediting calculations. The student must clearly understand that the figures shown on the Slide Rule have an arbitrary value depending on the primary value given to the initial 1. This primary value may be 1, 10, 100, or 1,000, or it may be .1, .01, .001, and this ratio must be observed throughout the whole scale. Reading Prime Divisions When we make the value of the Left Index, 1, then the other prime divisions will be 2, 3, etc. ; if it is .1, the others will be .2, .3, etc. ; while if the value given is 100, the others will be 200, 300, etc. The value given to the prime divisions depends entirely on the number being used; if the number is 125,350, the value which must be assigned to the Left Index will be 100,000. 26 DEPARTMENT STORE STATISTICS Reading Secondary Divisions When the value 100 is assigned to the Left Index, the sec- ondary divisions between 1 and 2 will be 110, 120, 130, . . . 190, 200. The secondary divisions between 2 and 3 will be read 210, 220, 230, . . . 290, 300. The same order holds true for all the secondary divisions. When the value 100 is assigned to the Left Index, the value of the Right Index will be 1,000. Reading Tertiary Divisions The tertiary divisions between the Left Index and the secondary division 1 (the value of the Left Index still remain- ing 100) will be read 101, 102, 103 .. . 109, 110; between the secondary division 1 and the secondary division 2, the tertiary divisions are read 111, 112, 113 . . . 119,120. This order continues the entire distance from the primary division 1 to the primary division 2. Between the prime divisions 2 and 4, the tertiary divisions are read 202, 204, 206 . . . 208,210,212,214 . . . 218, 220, 222, 224, . . . 228, 230, etc. From the prime division 4 to the Right Index, the tertiary divisions are read 405, 410, 415 .. . 495, 500, 505, 510 .. . 905, 910 .. . 990, 995, 1,000. Real Value of the Divisions It has been stated before, and it must always be borne in mind that the real value of any of these numbers depends entirely on the value given to the initial 1, and this real value may vary so that the position 405, for example, may be read 40.5, 4.05, .405, .0405, 4050, or 40500. The problem being solved governs entirely the real value of the initial 1. DESCRIPTION OF SLIDE RULE 27 Reading Off Results When the numbers in a problem contain more than three figures, the positions of the others must be gauged by the eye, but with a little practice the operator will experience no diffi- culty in reading off all numbers of three and four figures. In setting and reading off numbers the operator begins with the figures at the left and after having set or read off to three or four places considers the remainder of the number ciphers. Use Scales C and D By reason of the fact that more space is allotted to each of the divisions on Scales C and D, it is possible to read results more accurately, and for this reason all calculations described in the succeeding pages are best worked out on these scales. The operations could be performed on Scales A and B in exactly the same manner using Scale A instead of D, and B instead of C, and inverting all the formulae given. Multiplication Calculations involving the principle of multiplication are performed in the manner illustrated on page 28. Relation to Proportion With the rule set in the position shown on page 28, the reader will observe that every number on the rule bears the ratio of 2 to 1 to every coinciding number on the slide. The problem in multiplication illustrated is then nothing more than the simple proportion, 1 : 2 : : 3 : 6. It is, therefore, evident that if in any proportion, we set the first term on the slide over the second term on the rule the third term on the slide will coincide with the fourth term on the rule. h o t t1 n :i »*H T3 J3 O D. O w h •3 V T3 ■o C c D b. 14 o u M VM CI a o u t> ^j >> «5 O U Q U L_k~\l WO •2 v> R c\, ri'^ DESCRIPTION OF SLIDE RULE 29 Division The formula for performing operations involving the principle of division and illustrations of same are shown on page 30. Relation to Proportion With the rule set in the position shown on page 30, the reader will also observe that every number on the rule bears the ratio of 9 to 1 to every coinciding number on the slide : 1 on the slide coincides with 9 on the rule. 2 on the slide coincides with 18 on the rule. 3 on the slide coincides with 27 on the rule. 5 on the slide coincides with 45 on the rule. Note : The reader is advised to investigate this principle thoroughly as a distinct understanding of it leads to a clearer comprehension of the principles of the Slide Rule. Set the rule with 1 on the slide coinciding with 7 on the rule and see that the ratios of the numbers on the slide to the coinciding numbers on the rule are as 1 to 7. Right and Left Indexes In the succeeding examples, the "1" referred to has hap- pened in every case to be the Left Index on Scale C, but the reader must remember that "Set 1," "Over 1," and "Under 1" in all the formulae stated, applies with equal force to either the right or the left index, on either scale. In the problem, 8 X 5 = 40, it will be found that if the Left Index be set on 8 on the rule, that the other factor on the slide will be so far to the right that it will not coincide with any number on the rule. This being the case, the Right Index on the slide should be set over the factor, 8, on the rule, 1V_4 c t> o D ,_ u J= ll ■n -a c D b •9 B V T3 o in > > •5 TD u J= u J= u V > CD o Uj Q U Q c .25 Q "X ^ / Find the value of X in the proportion 45 : 20 ;: 12 ; X ( See Formula of page 3 1 ) ' " i ""| | " | | |' "i» i 'pi "Wi ' i'i ' i'i'i'i ' i'ina pii i |p ) | i | i| i| i | i|i jl i i |llll j liii |ii i jl iii |l«| iii |iy^^^ ^ ^ "i'"'i' "i' ' "i"i ii '» ' i ' >' ii ' ' i"inj; i; i <.Li i .i:i.!. i| . ii mtm ii l,,,,l,.,,1,,M,,,,f,„, V ,, ? C Sel 45 ' Ral Righl Index b Over 20 I" t I I-I ilirili[il.l,J,l.l,f,H,lil,l,l,Mili U,l,liM? liiiiiliiiil I ill.) tl| l 4 i |lf l Wlfl'l ' l ' *P' | |i |' I-..- I I '.1....^M,I.,, L.,.,.,jJ j i M i | iiii|ii n | im | m i| m i | iiii | iiii |i iii |i ii i| iii | iiii |H ii| ii i |»i i|iiii| i i i | iy^ 10 R Under \ Find 5.33 Figure 7, Proportion Jltlislrated DESCRIPTION OF SLIDE RULE 31 then 5 on Scale C will coincide with 4 (which by inspec- tion is read 40) on Scale D. Proportion In the illustrations given, the reader has seen the princi- ples of proportion applied in the problems of multiplication and division. One of the underlying principles of the Slide Rule is that, no matter in what position the rule is set, all numbers on the slide will bear the same ratio to the coinciding numbers on the rule. In the proportion, 12 : 30 : : 20 : X, we find the value of X in the following manner: Set first term FORMULA No. 3 — 12 I Under third term — 20 Over second term — 30 Find fourth terra — 50 The solution of the following proportion is a little more complicated : 45 :20 :: 12 :X The formula which has been stated for proportion is again used but when 45 is set over 20, the point, 12, on the slide, does not coincide with any number on the rule; this, then, makes a second setting of the slide necessary. See Figure 7 on opposite FORMULA No. 4 c Set 45 Bring Runner to right Index Drav7 Slide to right until Left Index is under Runner Under 12 D Over 20 Find 5.33 page. First, the Runner is moved to coincide with the Right Index, then the slide is drawn to the right until the Left Index coincides with the Runner. After this is done, the result is found on Scale D, coinciding with the point, 12, on 32 DEPARTMENT STORE STATISTICS Scale C. A clearer understanding of these settings may be gained by a careful study of Figure 7 and by a comparison of same with the formula shown. The Runner These secondary settings of the slide are necessary when- ever the third term of the proportion lies beyond the rule, either to the right or to the left. The use of the Runner in cases of this kind very greatly facilitates the speed with which these calculations may be made. Without the Runner, the result of 20 -^ 45 would first have to be " read ofif," then the left index would have to be set to coincide with this result before the value of X on Scale D could be found coinciding with 12 on the slide. CHAPTER III THE DECIMAL POINT THE location of the decimal point may, in most cases, be left to inspection, but there may be times when the operator will need to employ rules to determine its exact position. Characteristics The position of the decimal point is determined by means of the number of characteristics in the factors. The number of figures in the integral part of a number is called its characteristic. 2 is the characteristic of 12.165 1 is the characteristic of 2.124 is the characteristic of .257 -1 is the characteristic of .065 -2 is the characteristic of .005 MULTIPLICA. TION Slide Projecting to Left When the product is obtained with the slide projecting to the left, its characteristic is the sum of the characteristics of the two factors. Example 3.5 X 8 = 28. The sum of the characteristics is two, therefore as the slide projects to the left, the characteristic of the product is composed of two figures and the decimal point Js placed after the 8. 34 DEPARTMENT STORE STATISTICS In the problem, .0825 X 25, the characteristic of the first factor is -1 and the characteristic of the second factor, 2. The sum of these two characteristics is 1, hence the result is read, 2.06. In the problem, .0825 X .00325, the characteristic of the first factor is -1 and the characteristic of the second, -2, and the sum of the characteristics is -3. The slide projects to the left and the result is read off, .00027. Slide Projecting to Right When the product is obtained with the slide projecting to the right, its characteristic is the sum of the characteristics of the two factors less I. Example: 1.8 X 4.5 = 8.1. Here the sum of the characteristics of the two factors is 2, but as the slide projects to the right, the characteristic of the product is 1 and the result is read 8.1. In .0125 X 28, the characteristic of the first factor is -1 and the characteristic of the second factor, 2. The sum of the two characteristics is 1, but as the slide projects to the right, the characteristic of the product is / less than the sum of the characteristics of the two factors, and the result is read, .35. In the problem .21 X .35, the characteristic of each factor is and the sum of the characteristics is 0, but as the slide pro- jects to the right, the characteristic of the product is 1 less than which makes it -1, and the result is read, .0735. If the numbers to be multiplied are .0175 and .00314, the characteristic of the first factor is -1 and the characteristic of the second -2, and the sum of the characteristics -3 ; but as the slide projects to the right, the characteristic of the product is 1 less than -3, which is -4, and the result is read .000055. THE DECIMAL POINT 35 DIVISION Slide Projecting to Left When the quotient is obtained with the slide projecting to the left, its characteristic is the characteristic of the divi- dend less that characteristic of the divisor. Example: 25 ^ 5 = 5. The characteristic of the dividend is 2, the divisor, 1, the difference of the characteristics, 1, and the result is read, 5. In the problem .0125 ^ 25, the characteristic of the divi- dend is -1, the characteristic of the divisor, 2; the difference of the characteristics is -3 and the result is read .0005. If we divide .0004 by .005, the characteristic of the divi- dend is -3, the characteristic of the divisor, -2, making the characteristic of the quotient -1 and the result is read, .08. Slide Projecting to Right When the quotient is obtained with the slide projecting to the right, its characteristic is the characteristic of the divi- dend less the characteristic of the divisor, this difference increased by I. Example: 87.5-^3.5 = 25. The character- istic of the dividend is 2, the divisor, 1, but as the slide pro- jects to the right, the difference is increased by 1 making the characteristic of the quotient, 2, and the result is read 25. In the problem, .0075 -^ .00135, the characteristic of the dividend is -2, the characteristic of the divisor, -2, making the difference 0, but as the slide projects to the right, this dif- ference is increased by 1, making the characteristic of the quotient 1, and the result is read 5.55. A .• " '^ "" 36 DEPARTMENT STORE STATISTICS Decimal Indicator If the runner is equipped with a decimal indicator as illustrated by Figure 8, it will be a great aid to the operator in keeping track of the characteristics, especially when there are Figure 8, Decimal Indicator several factors to be multiplied, or where there is a combina- tion of multiplications and divisions. Continued Multiplication For the solution of the problem 8.5 X 2.14 X 42 X .035, the formula is, FORMULA No. 5 c Set 1 Runner to 2.14 Left Index to Runner Runner to 42 Right Index to Runner Under .035 D Over 8.5 Find 26.7 In the first operation, 8.5 X 2.14, the slide projects to the left and the characteristic of the product is 2; in the second operation, multiplying by 42, the characteristic of the second factor is 2, which when added to the characteristic of the first product, gives the resulting characteristic, 4, but as the slide projects to the right, this must be decreased by 1, hence the characteristic to this point is 3. The characteristic of the last factor is -1, and as the slide projects to the left, the char- acteristic of the final product is the sum of the characteristics 3 and -1, which is 2, and the result is read 26.7. ^ 7^2^ 9?< /^ 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. CHAPTER IV PROBLEMS FOR PRACTICE Multiply 12 by 1^. Multiply 186 by 175. Multiply 12 X4X3 X5. Multiply 49^ by 2.25. Multiply .0085 by .0002. Multiply .0115 by .000007. Divide 1^ by 4. Divide 65 by 16.25. Divide 175 by 5. Divide 1.45 by 3.5.^ Divide $7,850.00 by 71. Divide $925 by $220.00. Solve 71 X 35 ^ 16 X 7.05 ^ Solve 12X35 1.5. 7 Solve 12 Solve 25 Solve 18 Solve 33 Solve ? : X 6 :20 :35 :30 : ? :: 17.5 9 :X. 40 :X. ? : 20. 11 : 20. : 60 : 7.5. 11 \ 7/t>'^.0 7 -•> '-/ ojs^ I fo. An English Sovereign is equal to approximately $4.86 in United States currency; what is the value of 15 English Sovereigns? An article of merchandise which costs $162.50 is marked to sell for $250.00 ; what is the percent of Mark-Up ? A clerk whose salary for a certain period was $52.75, has sold during this period $810.00 worth of merchandise; required the percent of salary to sales. 38 DEPARTMENT STORE STATISTICS 23. Divide $720.00 among A, B, and C, in proportion of 2, 3, and 4. Note — Set the sum of 2, 3, and 4 to coincide with $720.00. Under each of the terms find the proportional amount 24. Find 2-3 of 12. Note — Try this by using the proportion 3 :2 :: 12 :X. 25. At what price must I sell an article which costs $1.25 if my expenses amount to 25% of my sales and I still wish to clear 8% ? Note— 100% Selling Price; 25% + 8% = 33% Gross Profit Required; 100%o — 33% = 67% Cost; then 67% = $1.25. Find the selling price by dividing $1.25 by .67, or by solving the proportion .67 : 1.25 :: 1 : X. CHAPTER V PAY ROLL STATISTICS THE Pay Roll is perhaps the hardest of all items of a store's expense to control. In a fully organized depart- ment store, the pay roll percentage for the entire store including selling departments, administration, office, and delivery will average from 14% to 15% of the sales. Human Element to be Overcome The human element plays a very strong part in maintain- ing the standard set for this item of expense. The stores which have the more highly developed organizations and which pay great attention to the things which will promote the highest degree of efficiency in the employees will of course be able to maintain a much lower percentage than those con- cerns which pay little or no attention to this important feature. Frequent Checking Necessary Frequent and regular checking of the results obtained, is necessary in order to pick out the weak spots. More sales are lost through the indiflference of the salespeople than through any other source, and it would seem that the manager would give more attention to this condition and the results of each salesperson's efforts than perhaps any other feature of the store's activities. The fountain can rise no higher than its source; the future growth of the store depends entirely on the efficiency of the employees, and the first step in the developing of this efficiency lies in locating the weak spots. 40 DEPARTMENT STORE STATISTICS Many Percentage Calculations Involved On account of the seemingly endless percentage calcula- tions involved in the preparation of salary statistics, many of the stores have found it impossible to prepare the essential reports and deliver them into the hands of the general man- ager with such a degree of promptness, that this official will be able to get full value out of them. Reports Required The general manager and the superintendent should be furnished weekly reports showing the percentage of each clerk in the store and the standing of the clerks in the departments to which they belong together with weekly reports by depart- ments showing sales for the week, number of employees on duty, salary paid, and the relative percentages, all compared with the results the year previous, or with a set standard. These have been considered in many cases, entirely out of the question. The Slide Rule makes them possible. Percentages can be figured at the rate of from 7 to 10 a minute, thus mak- ing it possible to calculate the percent of salary for each of 300 clerks in 45 minutes or less. PAY ROLL STATISTICS 41 Pay Roll Percentages Art Embroideries 7.0 10.3 15.7 13.0 Bakery (Selling Only) 7.0 Books 6.0 Candy 6.0 Carpets, Mattings, Rugs, Lino., Etc. 5.5 China and Glassware 5.5 Clothing (Men's and Boys') 5.0 Corsets 4.0 Dress Goods 5.2 Druggists' Sundries 6.0 Fish and Meats 5.0 Furniture 5.5 Gloves 5.0 Groceries 6.0 Hosiery and Knit Underwear 6.0 Housefurnishings 5.0 Infants' Wear 5.0 Laces and Embroideries 6.0 Jewelry and Leather Goods 6.0 Linens and White Goods 5.0 Men's Furnishings 6.0 Millinery 5.5 Muslin Underwear 6.0 Neckwear and Veilings 6.0 Notions 6.5 Shoes of all kinds 4.0 Silks and Velvets 5.0 Stationery 7.0 Suits and Cloaks 6.0 Toys 3.5 Trunks and Baby Carriages 7.0 Upholsteries 4.5 Waists 4.5 8.9 8.9 8.6 7.7 8.3 32.6 15.2 8.2 9.6 6.8 13.8 8.55 9.02 10.2 11.5 7.4 6.2 6.65 6.95 8.7 7.9 5.8 9.0 7.5 7.5 4.5 6.8 7.7 10.9 8.5 6.2 7.7 7.3 6.5 4.8 5.3 6.9 7.2 7.8 12.4 9.8 10.6 7.1 10.8 9.2 10.5 8.45 9.0 9.3 8.9 7.5 6.7 5.6 7.1 7.8 9.1 10.3 10.4 9.1 7.7 5.9 8.0 5.8 7.5 8.6 10.3 9.9 8.2 9.3 6.7 i.7 5.0 10.5 26.6 5.8 S.7 6.1 11.4 7.1 7.8 8.0 8.3 9.5 8.2 11.3 7.^ 6.2 7.5 6.4 42 DEPARTMENT STORE STATISTICS Fluctuation of Salary Percentages The last three columns in the foregoing table show actual average results obtained in the various departments named in different stores, working under practically the same condi- tions, in towns of equal size, while the first column shows what might be considered a fair standard for wages in these departments. The actual results given show a very wide variation, and while the results shown are from different sources, it would not be difficult to find cases where the fluctua- tions in the same concern in three years, unless the situation was properly controlled, would be as great. Control of Pay Roll Expense During the busy season, extra help must be engaged, but when business begins to drop off, there should be a corres- ponding contraction in the Pay Roll. This will not be the case, however, unless there is a constant and careful inspec- tion of the Pay Roll and a comparison of the amount expended for wages with the sales for the corresponding period, and with the standards which should be maintained by each of the departments. Perhaps the best standard with which to compare the results of the current year is the results last year, and to see that these results are maintained in every instance. Where last year's results seem to be unreasonably high, it is well to, at the same time, set an arbitrary standard and to frequently check the results against this. Weekly Census Report Figures 9A and 9B show a form of weekly census report. This is one report of which Figure 9A forms one side and Figure 9B forms the other. Figure 9A shows the results COMPARATIVE DEPARTMENTAL RECORD— SALES HELP Week Ended Ap ril 9, 1910 SALES EMPLOYEES - SALARIES % OF SALES DEPT. 1909 1910 '09 '10 1909 1910 1909 1910 1 435.02 330.84 5 3 37.48 29.00 8.6 % 8.8 % 2 306.32 288.60 5 4 30.00 22.33 9.8 % 7.75% 3 826.97 1,047.79 4 5 48.00 56.00 5.8 % 5.35% 4 2,607.45 2,727.41 12 10 126.04 138.09 4.82% 5.05% 5 965.58 836.97 4 4 78.75 73.00 8.15% 8.72% 6 1,242.08 709.07 6 6 73.00 85.66 5.85% 12.1 % 7 563.57 638.69 7 8 42.50 49.50 7.55% 7.8 % 8 2,902.86 3,610.66 11 11 147.25 180.09 5.7 % 5. % 9 328.50 513.29 4 6 28.21 44.17 8.6 % 8.6 % 10 265.46 246.64 3 3 18.80 19.33 7.1 % 7.85% 11 566.30 820.44 8 9 61.50 70.35 10.8 % 8.57% 12 433.46 323.86 6 9 44.41 63.27 10.25% 19.5 % 13 64.56 135.32 1 1 9.50 10.00 14.7 % 7.4 % 14 786.92 1,785.04 4 3 66.50 63.00 8.47% 3.52% 15 269.64 565.25 1 1 12.00 12.00 4.45% 2.12% 16 145.60 201.13 2 4 13.17 24.33 9.05% 12.1 % 17 502.02 442.37 6 3 45.75 24.00 9.1 % 5.45% 18 476.93 800.17 3 5 36.00 50.50 7.55% 6.3 % 19 401.40 604.99 2 3 20.53 27.00 5.1 % 4.48% 20 670.97 1,109.46 5 5 64.26 50.50 9.55% 4.58% 21 482.59 367.14 11 9 76.08 50.25 15.8 % 13.7 % 22 291.97 270.87 5 3 25.00 29.00 8.6 % 10.75% 23 262.87 259.59 3 1 32.75 16.00 12.5 % 6.18% 14.5 % 24 232.43 147.05 3 4 13.50 21.42 5.82% 25 86.56 106.42 2 2 17.00 18.00 19.65% 16.9 % 26 416.14 1,247.41 4 5 62.67 85.00 15. % 6.82% 27 40.82 69.79 2 2 9.00 8.00 22. % 11.5 % 10.58% 28 135.05 163,96 2 3 14.00 17.50 10.35% 29 45.20 81.59 2 3 10.00 17.00 22.1 % 20.8 % 29.1 % 30 229.60 204.80 11 11 65.00 59.50 28.2 % Total 17,265.34 20,656.61 137 145 ,328.65 1.481.79 7.7 % 7.19% U III Figure qA, Weekly Census Report — Sales-help COMPARATIVE DEPARTMENTAL RECORD— DEAD HELP Week Ended April 9, 1910 DEPARTMENTS EMPLOYEES 1909 1910 SALARIES 1909 1910 % OF SALES 1909 1910 Office Wrappers and Cash Girl; Delivery Room Drivers Order Rooms Janitors Elevators Advertising Telephones Receiving Room Management 26 26 4 10 5 9 3 3 1 3 12 24 4 14 9 5 1 2 15 220.73 79.58 54.33 85.50 37.08 99.16 16.33 40.00 8.00 28.00 175.00 254.67 70.00 62.00 154.17 82.50 96.00 25.83 78.50 9.50 22.33 198.00 1.28% 0.46% 0.32% 0.49% 0.21% 0.56% 0.09% 0.23% 0.04% 0.16% 1-01% 1.23% 0.34% 0.3 % 0.75% 0.4 % 0.47% 0.13% 0.38% 0.04% 0.11% 0.96% Total 102 119 843.71 1.053.50 4.88% 5.11% RECAPITULATION Sales Help 137 Dead Help 102 Total 239 145 1,328.65 119 843.71 1,481.79 1,053.50 7.7 % 7.19% 4.88% 5.11% 2.172.36 2,535.29 12.58% 12.30% SALES 1910 $20,656.61 1909 17,265.34 Increase... .$ 3,391.27—19.6% Figure qB, Weekly Census Report — Dead-help V \ PAY ROLL STATISTICS 45 of the operations of the Selling departments while Figure 9B shows the results of the Non-Selling and a recapitulation of the total results. In order to get this report out most promptly, it should be started toward the close of the week prior to the date it is to be rendered. All the results of last year should be entered and the percentages figured. In many stores the wages are paid each Tuesday for the previous week, and when this is done, the census report should be on the General Manager's desk not later than noon on Wednesday; this will give him ample time to plan adjustments which may be necessary, before the coming Saturday; but if the report is delayed so that it does not reach him on Wednesday, it may be too late for him to intelligently plan these adjustments. Getting the Information Together The auditors should complete the audit of the week's sales by Monday evening and be ready early Tuesday morning to make a report of the week's sales to the statistician. By this time, also, the pay clerk should be able to render a report showing the amount of salary being paid for each department and the number of employees in each. Worse Conditions Entered in Red As this year's data is entered on the census report, all items which show a worse condition than a year ago, are entered in red, as a " danger signal," to point out to the busy executive the things which require his attention without mak- ing it necessary for him. to " dig " them out himself. When the sales this year fall below those of last, or when the number of employees in a department or the amount of salary paid is more, or the percent of wages higher, the entry should be made in red. 46 DEPARTMENT STORE STATISTICS Formula for Calculating Percent On Form 9A, each of the amounts of wages is divided by the sales of the corresponding department to find the percent, but on Form 9B, each of the amounts of wages is divided by the total sales of the store for the week. The formula for setting the rule to calculate the percentage is: FORMULA No. 6 Set Sales I Under 1 Over Salary ' Find percent Set $435.00 Illustration: Sales $435.00, Salary $37.48 Under 1 Over $ 37.48 Find 8.6 After First Year When this report has been in operation a year, the labor necessary to prepare it is greatly diminished, for from the copy of the previous year's report, the sales, salaries, number of employees, and percentages may be copied to the current year's report. Weekly Reports Not Sufficient On account of the fluctuations of percentages in these weekly reports, they should be supplemented with other reports which cover longer periods and show the general average; these may be in the form of a comparative monthly report, or a cumulative report showing a comparison of the results from the first of the current fiscal year, or season, with the corresponding results the previous year. Figure 10 shows a report of this kind covering a year's operations. Sh> COMPARISON OF SALES AND SALARIES WITH RELATIVE PERCENT For the Year Ended Jan. 31, 1913 DEPT. SALES THIS YR. LAST YR. SALARIES THIS LAST THIS LAST 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 22,737.49 19,913.49 25.459.75 123,181.16 33,023.89 59,776.59 38,582.58 171,727.03 22,473.34 12,592.86 32,224.94 33,592.22 10,981.73 29,991.25 12,334.05 11,684.60 21,403.75 27,763.30 25,954.38 23,783.22 78,627.35 50,471.61 61,929.55 15,431.14 195,322.48 30,280.62 16,732.12 34,988.41 40,555.97 15,269.80 42,643.83 17,756.91 16,212.50 23,596.24 1,790.65 1,427.28 2,634.44 7,023.94 3,722.38 4,854.97 2,563.93 8,269.75 1,564.41 972.09 3,147.30 2,865.85 784.44 2,881.72 1,396.74 897.05 2,189.86 1,612.81 2,025.12 2,161.13 4,818.78 3,727.03 5,736.32 1,078.17 10,237.80 2,051.57 1,206.36 3,724.88 3,656.56 1,173.45 2,846.24 1,246.89 1,349.16 1,989.96 7.9 % 7.15% 10.4 % 5.7 % 11.5 % 8.15% 6.65% 4.82% 6.95% 7.7 % 9.75% 8.55% 7.13% 9.64% 11.3 % 7.7 % 10.5 % 5.82% 7.8 % 9.1 % 6.12% 7.4 % 9.25% 6.95% 5.25% 6.8 % 7.25% 10.6 % 9.02% 7.75% 6.8 % 7.05% 8.32% 8.45%, Total 796,108.00 969,485.90 62,245.68 69,550.54 7.8 % 7.2 % Figure lO, Annual Comparison of Sales and Salaries 48 DEPARTMENT STORE STATISTICS Compare Results with Standard The current percentages shown on the reports illustrated by Figures 9A, 9B, and 10 should, also, in addition to being compared with the percentages of the previous year, be WCEK np.PT. ENDED DEPT. NAME STAND. ISC NAME SALES TaYa^rv 1> STAND- ING BUYERS WILL POST THIS REPORT IN DEPT. FOR CLERKS ATTENTION TOTAL t TOTAL i AVE «ACE 7, 1 Figure ii. Weekly Clerk's Sales Report PAY ROLL STATISTICS 49 checked by the superintendent, or general manager, at fre- quent intervals, against the standard set at the beginning of the season. Strengthening the Weak Places Having now detected the departments which have fallen below the results of the previous year or the standards set, the next step will be to locate the cause, especially as it may be associated with the inefficiency of the salespeople. At the close of each week, the auditing department will enter, on the form illustrated by Figure 11, the sales for the week for each individual salesperson, using a separate sheet for each depart- ment. These sheets are then passed to the Pay Roll Clerk who will enter the salary paid to each for the week, after which the percentage for each clerk is calculated. Clerk's Percentages The Slide Rule makes it possible to complete the calcula- tions of the percentages for all the clerks in the average sized department store in less than an hour. The setting of the rule for these calculations requires the same formula (Formula 6) as described for making the calculations on Figures 9A and 9B. Clerk's Standing The standing of each clerk in each department should be placed in the column at the extreme right of this form. This is determined entirely by the amount of goods sold. Then the names of the clerks in each department are copied on the perforated part at the left of the form, in the order of standing. These reports should be given to the superintendent, or gen- eral manager, not later than Wednesday evening each week NO /OV^ »» f>f/VMF fOX^>y^^ laxity /riairqCL^ « * •» WEEK ENDED SELLING JN DEP'T SALES WEEKLY SALARY * STAND- ING REMARKS f~\ .^^^ s / 25o m 7 J^-^ ^ U /><" 1 / OJ / 3^ « / «> ^''' J. 1 ^^ 1 /32 <3^ 7 i */ 1 ??lU, f 1 /J3 7 ' 7 <> V - V- ('»«■ 1 /? 3 r^o g g*f aA 2:? 1 .^^A' Vf 7 7 » a - -^ 3^ ?7 4 VJ- r-" •/ Ofo^ *s- / V&2 xo 7 7«* */ / '^ / avT? Oj 2 «v 1 2- «/ "9 / QU 73 7 1 7- 4/ r\ .24 / / 1 Cj / -J ^'i »/ U TtIcu^ ^ 1 -a a a ' ^1 3.^ */ ^ /^\ O Figure 12, Clerk's Individual Sales and Salary Record — Weekly Basis PAY ROLL STATISTICS 51 for the previous week. The sheets should be fastened together in such a manner that the superintendent may easily detach the left hand perforated sections, retaining the other parts for his own reference. Permanent Cumulative Records Before giving these reports to the superintendent, the sales, salary, percentage, and standing of each clerk should be posted from the report to the form shown in Figure 12. From this it is possible to obtain at any time the average results of any clerk's efforts and to note the advancement which is being made along the line of efficiency. Clerk's Records on Monthly Basis When weekly results are not desired, a slight variation of these forms may be made. Figure 13 shows a modification of Figure 11 so that it may be used for compiling the salary statistics monthly instead of weekly. A column has been added in which to enter the number of days employed during the month, and the salary column has been changed to Weekly Salary. Accurate Records vs. Usual Method Under the ordinary methods, in preparing these statistics on a monthly basis, the calculations are usually made on the basis of Wages Paid to each clerk, during the month, rather than that of Wages Earned, and on account of about every third month having five pay days, the percentages are far from accurate, while if steps are taken to base the calculations on the Salary Earned, the effort required is so great that there is likely to be much delay in getting the report out. 52 DEPARTMENT STORE STATISTICS The method herein described, makes it possible to deter- mine accurately, the selling percentages for each clerk with the minimum labor and to present the record of each clerk's results in a much more concise and understandable form than is usually employed. nFPT •2'^ MONTH OF /Vlltay/-? DF.PT a? aa » .^- 3 2 j- n /2 i (0. O^'U-r-r-yr-K^ fT /h2S kM'oa^^v-Uw • <» no 7'^ 57 />#• 5 L 7)r"^ J'nrLM 6. (O ■ to'M'UyytJt.-r^ ioUq ^a 27 /4 7 1 SE^Zl 7 (2. ^....^.j:.^ fasc AO 2C /3 ^ &. A5t:<,«-^i- o NAME ♦ » 1 MONTH SELLING IN DEPT SALES DAYS WEEKLY SALARY- % STAND- ING REMARKS Feb. Mar. Apr. May June July o Aug. Sept. Oc Nov. Dec. Jan. Total REMARKS o Figure 14, Clerk's Individual Sales and Salary Record. Monthly Basis 54 DEPARTMENT STORE STATISTICS How to Obtain Accurate Results When the month's sales have been audited and posted to the sales abstract, the auditing department should post the sales of each clerk to Figure 13, using a separate sheet for each department, at the same time entering the number of days employed in the proper column; the number of days employed is determined by the number of postings to the monthly sales abstract. The sheets are then passed to the Pay Roll Clerk who will verify the number of days employed and enter the weekly rate of wages. Calculating Percentages The next step is the calculation of the selling percentage ; a better understanding of how this is done may be gained by thfe examination of a concrete example : — A clerk who receives a weekly wage of $13.00 has been present during the month, 23 days, and sold $825.00 worth of merchandise; required the selling percentage. The Slide Rule is set in the following manner: — FORMULA No. 7 c D Set 6 days Over $13.00 R to 1 1 to R R to 23 $825.00 to R Under 1 Find 6.03% The first operation required is to find the average daily wages; this is obtained by setting the number of working days in a week over the weekly wage, the result being found on Scale D, under 1 on Scale C (See Figure 15 on opposite page), but as this is not to be made a part of the record it is not read off, but is in turn multiplied by the number of days present during the month. In the position in which the rule is now setting, the num- ber 23 on Scale C does not coincide with any point on Scale D, hence it is necessary to set the runner at the right index, then f merchandise; lililililililililiTiiiil MiiTiniliiiilimliilTiiiililiiTllIlM I i|'|i|i|T|i|'j'l'l'lT|i|i|'|i|i^'|i|TlflWipifWj i [i |i ii |i| i| i |imii| i i iiiiiii |i i i ii i iii | ii lN iii |i iii ^^^ ^ ^^ ^ ^ ^^ L| i| ii i | i | i |i| i i i i i i|iiiii i iii[ iiii |i i ii| iia ni ii |i i iij ii i i | ii :,iii,i,L,i.i,i,liiiii.li?iliiililJiiiiiliiLilililili!ilili diiUiiliiM- wiwiwpiwr I A clerk who receives a weekly wage of $13.00 has been present during the month, 23 da>'s and has sold $825.00 worth of merchandise; required the selling percentage. (See Formula on page 54) fHyiH ' l I'f' rWl i| i .|. i ; iii | i .l iii i|i i „|mi| ili ,|iiii|..|i,.|.l |.jqV|ll ' f| l f |l| f| l |#|ftft|ip[llll | t ^^^^ ^ ^ ^ ^ ^ ^ I .fi~i.,.Lj...i'„i..l„„i 1 1 ,i,.i,i,i,Li.l,M.i,i.i hi .} liiJ. ,1„iiiii„Ii„i„lt LJ in ii ii |iii i |iiii |i iii|iii | i ii| iii i| iii i | iii|»i i | ii fi i |i i i|iui| i »ji |i|i|i| Y| i|i|i| i^ i|i | i^^ Figure IS. Fini Position C 6 Rnt D \ 13 \ iril|'f| i' | 'l|l l 'i '| l |l| 'l [l|| f || ii f |i | i (i^ ^ |l|'|i | i||l' l' H i | pw|1iiy"| i » ' f |. i |.n iiii |i.p.| ■I-- i:..i-i:.i-.r.i-i:.ti....i ..-i i i„„t.,i,-i-i.,i-,i-i-i ■iJ,i,i,|.|,i,i,i,Mii,i,iir,i,i iitiiiiiidMiWiIiiMJii IwiiitMiniiiiitiilwJ il i |i i i l i| iil |iW I Riglll unlil Left Index coimiilrs wilt, R l iiii l lii 'l l ii .l i . i M iii ' ii r[r i ! i l i [ il i li [.[ i l i li li f i (? l l ili M il 1 i l i l il il i l i ltt li L |)j ku! || |i | |i.l|y i lij i t i fl| )ll Vll i Vri ' 4'l''i'l'f'f ' l'l '''l'' ""|""l"l"t"l"j'l lll| | ll l l | llll| l lll | ll .|. ll | lll l | N I I| l .|N I I |l . ljl .| ll 1|.T II [..| l iL | l l t|Wl |l l f l^^ ^ ^^ ^ ^ jlNTI'|VlTI'JVITiy|illi|frlll[lilil'i"l'"J""l"if'1'|f«P'J'T] ' M.u.li.iiU.l.i iii,i,i,iJ,i,i,i,iL,i,i,i,l,u,i,lti,u,iJ,i,mkl|l,!j Figure ,-. Third Pin C I R 10 23 l i i i y i fw#fl#f^^ 1'^ ji ''?""i'"'t i-i»ii .tj "Ti"l""l""l«"|"l««l""FI"5'|i|i|'l'|i|if .■■l.'iil' I? K I'"l~i'li' I' [«R)^tl»|»l|#i]^^ ■Mn'Jili|i|if|if|i|iliJi|iliPP|i|ili|i|iJl'|i|i|ipi}mipll r-- .« r .ID-.- ^ S25 to R I Under i t-igurc IS. Fourth rosillon — — » I I Finil 6.0S% PAY ROLL STATISTICS 55 leaving it in this position, move the slide to the right until the left index coincides with the runner (See Figure 16) ; then by moving the runner to 23 (See Figure 17) on Scale C, we find on Scale D the total wages earned during the month. This is now divided by the total sales for the month which is done by placing $825.00 on Scale C to coincide with the point indicated by the runner on Scale D, the result being found on Scale D under the right index on Scale C (See Figure 18). The average time required to perform these operations is less than 30 seconds for each problem, making the time required for an entire force of 250 clerks about 2 hours. Permanent Record of Monthly Results Figure 14 is a variation of Figure 12, modified so that it can be used in connection with Figure 13. This brings the results of a salesperson's efforts for an entire year together on one page and is a very convenient and satisfactory form of record. Wage Records on General Books What has been said before in regard to inaccuracies brought about by wage calculations being made on the basis of 'Svages paid" rather than "wages earned" in dealing with the individual salespeople, applies equally as well to the total pay roll figures by departments, to be incorporated in the entry at the close of the month, charging the several accounts in the general ledger. As every third month contains 5 pays, and as the corresponding month a year ago may have contained but 4, the comparative percentages are of little value unless the charge is made on the basis of wages earned, not on the amount paid. k 56 DEPARTMENT STORE STATISTICS To Determine Wages Earned The approximate amount of wages earned by the em- ployees in each and all departments, every month, regardless of the amount paid, may be readily obtained in the manner illustrated by Figure 19. Divide a sheet of columnar paper Figure ig. Monthly Distribution of Department Salary into sections, — one for each department; post to this the wages paid for each during the month, then foot and balance the sheet with the total amount of pay roll for the month. If there has been four pay days there will be 24 days' wages represented on this sheet, while if there has been five, there will be 30 days. Then, to ascertain the number of days to be charged to the month, deduct the number of Sundays in the month from the total number of days in the month; if the month contained 30 days and there were S Sundays, the num- ber of days to be charged for will be 25. Assuming that there has been four pays, and that in the month under consideration there were 25 working days; by ordinary arithmetic we would find the approximate amount of wages earned by the employees in each department, by divid- ing the total wages paid by 24 and multiplying the result by PAY ROLL STATISTICS 57 25, or taking 25-24 of the amount paid. With the Slide Rule this resolves itself into the proportion, 24 : 25 :: Salary Paid : Salary Earned, and the Slide Rule is set according to Formula 8. FORMULA No. 8 c Set days paid Under salary paid D Over days worked Find salary earned Inaugurating Accurate Methods In order to inaugurate this method of accounting, it is necessary — 1. To determine at the last of some month, the amount of wages unpaid at that time, and to make a journal entry charging the departments and crediting Pay Roll. The account "Pay Roll" will then show on the balance sheet as a current liability. 2. Charge all Pay Roll checks issued during the month to Pay Roll account, and at the end of that and each suc- ceeding month, prepare as shown by Figure 19, an ab- stract which forms the basis for the journal entry charg- ing the departments and crediting Pay Roll. In this way the comparative percentages from month to month will not be subject to the fluctuations encountered under ordinary methods. Adjustments Necessary On account of these results being approximated, it will be necessary to adjust the balance of unpaid wages from time to time. While the variation is slight, it should not be allowed to accumulate. The best time to make these adjust- ments is at the end of those calendar months on which all wages earned have been paid, at which time the entry should 58 DEPARTMENT STORE STATISTICS be SO adjusted that nothing will be left on the Pay Roll account. How to Make Adjustments When this adjustment is made, the abstract shown as Figure 19 is prepared in the usual manner, but before the subsequent journal entry is made, its effect upon the Pay Roll account should be noted, care being taken to observe whether the difference would be a "debit" or a "credit" balance. This difference should then be prorated among the departments on the basis of the amount already distributed. The prorat- ing is done in the following manner: — FORMULA No. 9 D Grand Total of Set — Amounts Distributed Over — Difference to be Prorated Under — Salary charged Find — Proportional amount to be (a) added or (b) deducted a, If Pay Roll Account would show debit balance. b, If Pay Roll Account would show credit balance. CHAPTER VI CALCULATING MARK-UP AND % MARK-UP THE successful merchant is deeply concerned with those things which influence the turnover of his stocks and with the rate percent of gross profit which he realizes. Quick turnover is the moneymaking principle, and experience has taught that there is great danger of retarding the rate of turnover by marking the goods in the beginning, too high. Danger of Excessive Mark-Up In the eagerness to increase the profits, there is a tendency to mark more than fair profit on goods when they are bought, unless there is a record kept which will serve as a guide in governing the original Mark-Up. Selling Prices Recorded on Invoices To this end, each buyer should be required to mark on all invoices as they are checked, the prices at which each article is to be sold. (Figure 20) . In the office, then, extensions are made at these prices and a footing taken of these amounts so that when the invoice passes the general manager it shows, in addition to the COST amount, the RETAIL amount which will be realized from the sale of the goods if sold at its original marked price. Auditing Invoices Auditing the cost extensions and making the retail exten- sions are matters which require greater accuracy than would CALCULATING MARK-UP 61 be possible to obtain on the Slide Rule. A key-driven adding machine is the usual mechanical means employed for making these calculations, but the Slide Rule is the most rapid and satisfactory means of calculating the percent of Mark-Up when the cost and retail amounts have been obtained. Retail Extensions Should be Made in Red The retail extensions should be made with red ink or with a color, not likely to be used by a wholesaler in making out bills. Pencil figures should be avoided and unless ink of some odd color is used there is great danger, when paying the bill to pay the retail amount instead of the cost amount. Calculating Percent of Mark-Up With the COST and RETAIL amounts shown on Figure 20, the percent of Mark-Up was obtained in the following manner: FORMULA No. 10 c Set Retail Amount Under 1 D Over Profit Marked Find Percent of Mark-Up Illustration: C Set $282.19 Under 1 D Over $83.13 Find 29.46% This gives the percentage to three places, beyond which it has no practical value in merchandising statistics. It is easily possible for an operator to acquire a speed of from 8 to 10 such operations in a minute; even at the rate of 5 a minute, this percentage can be calculated on 150 invoices in 30 minutes. c s C S C S c S .25 .20 .44 .30^ .63 .38'' .82 .45"^ .26 .20^^ .45 3103 .64 390.- .83 ^4535 .27 .21-^'^ .46 .3P" .65 3939 .84 4565 .28 .2P« .47 .3P' .66 3976 .85 .45^' .29 22^« .48 3243 .67 .40'^ .86 .46^^ .30 ^2307 .49 • 3288 .68 .40^'^ .87 .46" .31 2366 .50 .331 .69 .40^^ .88 .46«'^ .32 .24^^ .51 3377 .70 AV' .89 ^4708 .331 .25 .52 .342^ .71 .4P^ .90 4736 .34 .25^^ .53 .34^^ .72 41 86 .91 4764 .35 .25^ .54 3506 .73 4220 .92 .47^' .36 .26^^ .55 .35^« .74 4253 .93 .48^^ .37 .27 .56 3590 .75 .42^^ .94 .48^^> .38 .27^ .57 .36^^' .76 .43^^ .95 .48'^ .39 .28^^ .58 .36^^ .77 4350 .96 .48^^ .40 .28" .59 .37" .78 4382 .97 4923 .41 .29''» .60 .37^ .79 4413 .98 4949 .42 .29^^ .61 3789 .80 4444 .99 4975 .43 .30^^ .62 .38^^ .81 ^4475 100 .50 Figure 21, Comparison of Percent of Profit Based on Cost with Same Based on Retail CALCULATING MARK-UP , 63 Percentage Cards for Buyers As a guide in establishing the prices at which merchan- dise is to be sold, the buyers in some stores are furnished with cards as shown by Figure 21. On these cards the rela- tion between the percent of Mark-Up on the COST and the percent of Mark-Up on the RETAIL is shown in parallel ver- tical columns. On this we see that if we add for profit an amount equal to 25% of the COST we will realize a profit of only 20% OF THE SALES if the goods are sold as originally marked. So also, 33 1-3% of the Cost equals 25. % of the Retail 40 % of the Cost equals 28.57% of the Retail 43 % of the Cost equals 30.07% of the Retail 82 % of the Cost equals 45.05% of the Retail Percentage Card Used in Connection with the Slide Rule The Slide Rule may be used very advantageously in con- nection with such a card in establishing the retail prices for new goods. If the standard for "orginal Mark-Up" is set at 28.5% of the retail^ we find by referring to the card that this is equivalent to 40% of the COST. Thus we have the propor- tion, 28>^% : 40% : : Cost : Selling. On the rule we then set: Desired percent Set — at selling FORMULA No. 11 Under — Cost Over — Corresponding Find — Required percent at cost Selling Price With the rule set in this position, we find that An article costing $2.00 should be marked $2.80 An article costing 1.50 should be marked 2.10 An article costing 1.40 should be marked 1.96 An article costing .30 should be marked .42 PURCHASES Month Ended January 31, 1911. DEPT. AMOUNT COST RETAIL % MARKED ST'd. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 230.67 364.10 406.49 602.50 33.31 66.38 585.50 932.75 453.83 687.04 1,498.56 2,235.85 295.98 436.07 1,701.07 2,513.11 187.06 246.00 877.41 1,383.42 399.45 909.83 346.83 621.79 980.95 1,374.22 512.62 901.89 359.80 447.90 346.22 540.61 2.35 7.86 253.67 392.26 36.6 35 32.6 33 50.1 40 37.2 35 34.1 33 33.0 33 32.2 33 32.3 33 23.9 30 37.0 37/2 56.1 45 44.3 45 28.6 33 43.2 45 19.7 25 35.9 33 78.7 50 35.3 33 1 — ' ^ ^''^ ^^ ^ — -""-y..,^-^ Total 31,651.40 51,545.94 38.6 37/ Figure 22, Purchase Report Showing Percent of Mark-Vp Maintained CALCULATING MARK-UP 65 Another Method — Without Card When the relative percent on Cost and Selling Prices is not known, the following formula will give the same results : — FORMULA No. 12 100%— Desired % Set — Mark-Up (Selling) Over — 1 Under Cost Price Find Selling Price Do Not Mark According to Set Standard It is not to be taken from this that all merchandise in a department is to be marked according to a set standard, for nothing could do greater harm. The slowest moving goods should be marked with the widest margin of profit and that which will turn in a few weeks, at the narrowest, but the average of all should meet the general average. In a depart- ment doing an annual business of $100,000.00, the goods sold might be classified as follows : $50,000 which will turn in from 1 to 2 mos. at 28^% profit 25,000 which will turn in from 3 to 6 mos. at 35 % profit 25,000 which will turn in from 6 to 12 mos. at 40 % profit At this rate the average profit on all lines would be 30.5% or approximately 30%. Periodical Reports on Mark-Up We see from this that a single invoice is not a criterion, therefore the manager must be furnished with reports from time to time showing the average marked by each depart- ment. (Figure 22). These reports may be furnished either daily, weekly, or monthly, according to the requirements of the business. In preparing reports of this character, the Slide Rule is used to calculate the percentages. s 1 ^ Is u. c z h z i tc h cc o u. D ci O <; X u CO U Q 2 X 4^ - - .-_ i , 1 j S r «' • > u (A z 111 a. X u 1 1 1 J _i^_ \ ^ ^ j - -U rr p- -^ p ■~^ --1 — p ^ v- — rrr -p --r . TT' o z f- z < Q d 2 a 3 ^ , « • ► 1 ' i > ° 1 1- 1 » k ^j r - • 1 • « f ' fc I ! r «) ; 1 J • !- z 3 < "s s 1 n S° 1 * T -J N t r .t w r ' 1 (1 r. *r r^ 1 :; J r ■3 "1 *" • « < '" t- S 4 ^ ■ < • 4 i < J E.> f 5^ ^ - J « - - - , 2 = '^ = = = s a a a i3 s: « a s « R R R R S :? P n X » !-•(. c M _ Figure 23, Columnar Purchase Record CALCULATING MARK-UP 67 Purchase Record — Columnar These reports are made possible only by proper form of Purchase Record, which, as will be seen by Figure 23, may be obtained by making only a slight variation in the ordinary columnar record so common in department stores. It will be seen that the only change necessary to get a permanent record of the Mark-Up on each invoice is to add another column for each department, into which to place the Retail Value of each invoice entered. In order not to confuse the entries made on this record, some firms adopt the plan of entering the retail in red ink. Purchase Record — Unit System As stores grow from small to large ones and from large to larger ones, constantly adding new departments, there is a need felt for a Purchase Distribution that will be elastic enough to allow for this expansion without the necessity of providing correspondingly larger forms. Figure 24 illus- trates a form admirably adapted to this purpose. These forms are used in a sectional post binder having division tabs, one for each department. All invoices for department " 1 " are entered in section " 1," etc. With this form it is possible to care for a new department which may be added at any time by merely opening a new section. The Stock Ledger At the close of each week, the total amount charged to each Department at COST and RETAIL is carried to the Mer- chandise Stock Ledger, (Figure 25), where again there is use for the Slide Rule in calculating the average percent of profit marked for the season. When the amounts for the current week have been posted and footed, the percent of 68 DEPARTMENT STORE STATISTICS PURCHASES FOR THE MOMTH OP Q— i.>foe/ DEPARTMENT '^ Figure 24, Purchase Record — Unit Syste/n (Left Hand Page) profit realizable as indicated by these amounts must be calcu- lated, so that the Stock Ledger shows at all times (1) the percent of profit marked on each week's purchases, and (2) the average maintained for the season, including the inventory at the beginning. Calculating Season Mark-Up There is some dii^ference of opinion as to how the average Mark-Up for a period shall be figured. Some advance the idea of deducting the Reductions at Selling Price from the original Retail Value charged to the department, thus cor- recting the average percent of Mark-Up from the beginning of the period to that date. The following statement may aid in getting a clearer understanding of this principle: CALCULATING MARK-UP 69 PURCHASES 45 rOR THE MONTH OR Q.-l-t^Ay 191 DEPARTMENT */- fV __ 1 D»nUCTION5 "^.r?ir DATCPAIO •ftsrf -...„, «.^.,» MtJCELLAWEom \ MEBCHAMDISe c»nnT "1°"" OMCOUKT RrTTJBKED . » 7 ,.„ ^7 L. / i. Cf, ,A ?fNo i<, l^c >> a •fe ^ ^ » "1 1* ^, c. ,<„ 3 5o - %s 3 Tf , J-o s !t .. ,, *?> Z^tX 23- II / 2 Ul O u *>) • fi J ^ ^ V / ' h- z — ■/ t al Ul Q -1 < IS z > • ' o \ oa c; o "Vl > 1 J > 1^ > <<1 \ a ^ ■ M ^ ^ •> > L C ^ J •o '•; J >i C / Q U hi t ° \ -J kl )^ y in z ( <0 .G U P 1 > n r- , Q / 3 *) ^ ■- J i h- K ii 0) UJ ID HI •^ S > ' - I « fv , ■ <1 o z < 10 n "1 > 5 <^ ft ^ — o tt: > >1 1- ■xi <»1 "0 > / - i^ u s m So > ' ^ ^ _-^ ) Oo Oo ^ • ^ CO uj ,5 W ~ Oo ^ c ^ Ul iii D*" i! . ^ -^^ - . "a d " (■ ; 111 ?^ *0 "5 - >s ^' c^ CXI 5- -" CI V. 3 ^ w ^ ><) L J? ^ < (V ^ s ^ 1^ < ^ ^ \ < < 1 ^ •6 c 1- ' h H h : H • t- • , H * ? N > c 0, f ► r ■' t , ; r X < ul \ Figure 25, Merchandise Stock Ledger CALCULATING MARK-UP 71 Reason for the Objection Illustrated In order to illustrate the weakness of this plan, we will take an extreme case. Assuming that during the month of February, the sales amounted to $1,000.00 and the reduc- tions $500.00. From the fact that the original Mark-Up on Stock and Purchases to end of February was 33 1-3%, it will be seen that the merchandise sold during February was at absolute cost. But by the plan being just described^ the gross profit is calculated on the basis of the percent of Mark-Up obtained after deducting Retail Reductions from Total Retail Stock and Purchases. This, in the example illustrated, being 32%, the gross profit for the month of February would be estimated at $320.00, which may be seen, from the condi- tions stated, is impossible. A More Accurate Plan Greater accuracy is made possible by dealing with the Reductions in connection with the SALES rather than in con- nection with the PURCHASES. When this is done, the calcula- tions are made on the basis of the original percent of Mark-Up (cumulative) instead of the corrected percent of Mark-Up (cumulative) after deducting reductions. Plan Illustrated Taking again the same concrete example just illustrated. The sales amounting to $1,000.00 and the reductions to $500.00; we find that, had the same goods been sold with- out any reductions, the sales would have been $1,500.00. As it was, merchandise originally valued at $1,500.00 (Retail) was taken out of stock, the revenue for same being only $1,000.00. 12 DEPARTMENT STORE STATISTICS Sales, February $1,000.00 $1,000.00 Reductions, February 500.00 Original Retail Value of Goods Sold. . ..$1,500.00 Deduct Average % Mark-Up— 33 1-3% . 500.00 Cost of Goods Sold $1,000.00 Gross Profit $0,000.00 Tnis method insures reasonable accuracy. The gross profits will fluctuate at all times in inverse proportion to the reductions. Only the fact that the goods sold during the month may have borne a higher or lower percent than the average shown on the Stock Ledger stands in the way of absolute accuracy. Another Advantage of the Stock Ledger It is reasonably possible that under ordinary circum- stances, the kind of merchandise which is sold during a period will be repurchased during that period. It follows, then, that if a department sells only that class of goods on which the Mark-Up is less than the average shown on the Stock. Ledger, that the new purchases during the same period will" consequently show less Mark-Up than the average, so that the Stock Ledger is, in a way, a barometer as to the kind of merchandise which is being sold. CHAPTER VII TAKING THE INVENTORY OF the records kept by the retail store there is, perhaps, no other that is of as much importance to the mer- chant, or one that can give more valuable information than a properly handled and carefully taken inventory. It has not been long since the inventory was looked upon by many merchants as a sort of necessary evil and was taken in the regular routine of business, only as a summing up that was necessary to arrive at the amount of merchandise on hand, to use in making the closing entries on the books at the end of the fiscal year. Beyond this, the merchant never expected to derive any good from the work. Under these conditions, the inventories were allowed to drag along for weeks before the final closing. Such an inventory gave anything but accurate results. There are stores today, whose inventories show a total running up into the millions, where the listing of all stock is completed in a single day's time, and within two days from the completion of the listing, the final figures are ready to be incorporated in the closing entries of the year's business. In addition to having the stock listed accurately and quickly there are some other essentials which should not be overlooked. Relative Age of Merchandise Almost every merchant today is indicating on the price ticket, either by letter or other character, a mark to indicate the time during which each article of merchandise was placed 74 DEPARTMENT STORE STATISTICS in stock. Where the letter is used, it is usually prefixed either to the cost or selling price on the price tag. These letters are usually changed every six months or every year, and when this plan is adopted it is a very easy matter to determine the age of any article of merchandise merely by referring to the price tag. If the form of inventory sheet adopted is provided with a special column as indicated by the column headed "Letter" on the form here shown, Figure 26, it is a very simple matter to enter in this column, the letter shown on the price ticket of each article of merchandise listed in the inventory, and the management will then be able to satisfactorily determine the proportion of old to new stock in any or all departments. Subdivisions of Stock It will be found very desirable to classify the stock in each department into as many subdivisions as possible, instead of jumbling it together as is sometimes done. In the Cloth- ing Department we might have such subheadings or sub- divisions as: Men's Clothing, Boys' Clothing, Men's Over- coats, Boys' Overcoats, Men's Pants, Boys' Pants; and each subdivision may be again divided according to the general character of the merchandise contained in each, either accord- ing to the color, style, or general utility. In order that this may be done advantageously the merchandise should all be carefully arranged and assorted before the listing is begun. Cost and Selling Prices Some of the larger stores have adopted a method of in- ventorying at selling price only, while others are following the plan of inventorying at both cost and selling prices. The medium sized and smaller stores have been adhering to the TAKING THE INVENTORY 75 plan of inventorying at original cost or market value (cost). The advantage to be gained by taking an inventory at Cost and Selling Prices is readily seen. There will be a surprise in store for most merchants who have never taken an inventory in this manner. The difiference between the percent of profit marked on the merchandise as shown by the inventory sheet and the percent of profit realized from the operation of the various departments, will, in some instances be very great. The plan is, however, not intended so much to show the mer- chant how well he has been doing as to show him where he should do better, and if it serves this purpose well the concern who adopts this plan will be amply repaid for any additional effort required to take the stock in this way. Form of Inventory Sheet Taking an inventory at Cost and Selling Prices is greatly facilitated by using the correct form of Inventory Sheet, — one provided with spaces in which to enter the cost and sell- ing price of each article listed, and for making a record of any reductions in the prices, taken at the time of listing the stock. Such a form is illustrated by Figure 26. Preparatory Work Before the date set to begin listing the stock the mer- chandise should all be carefully arranged and classified. All goods that cannot be listed as units should be measured or counted and a memorandum showing the quantity should be attached to each piece of goods, or to each package. These memorandums may be prepared by cutting a piece of ordinary wrapping paper into suitable strips. While this is being done in the department, the office should prepare the sheets upon which the stocks are to be listed. The sheets should be 76 DEPARTMENT STORE STATISTICS INVENTORY Qa.^^.3i, /^.? O^^pArlm^M ^ P- ^/vrO-.t^ •■ ^SL^^Ix^iiX >C p„. yO ^ h^ 43 c-^A^-aJLto, Entered by. V jT - «i^ O-Ji*- ...C.,.T,0,. jc^«. 1 - EMtM coti - « 1 ^ LUM tmiM ItUtM lUucnM I--. K " "° *"" u.-; " ^ i'^'o V 2c oo z*-^' .5.» 1 a 7"> /,?^' /jro 3o^ ,= .. r- %l-^ / /(a.»*-*w /?>-«-i-t.-x/ /dU.<..i-J*" .'.cH 2o*° ^ <•» tJo- 3a-° ,pr. jro f, ^CC ,r /^ ?t^.t^ cf-....:*^ '<;- /?-^- t2£o -7-^° =S~ ao- / f oo r. •"7 7 /Se^ X. -.. /. /y ,/<(yyy //0(yv ^^/o-''/ / f X - > t3. ^O fl - 3i.,s-. C - cs... ^ / t t. o • ,.,« „„tr- »«—... / 6( .. 2S J-« k T oSo Jj fo ."■.... " «• 1 Figure 26, Inventory Sheet for Taking Stock at Cost and Selling dated and those for each department should be consecutively numbered and have the department marked plainly thereon; the sheets for each department should then be securely fastened together and filed away until ready to be used to list the stock. TAKING THE INVENTORY 11 Goods .Sold After Counting hut Before Listing It frequently happens that after goods have been counted and measured, certain items are sold. All the clerks should be carefully instructed to change the quantity indicated on any of the memorandums which may be attached to any piece of goods or a package from which they make a sale, // a mem- orandum is attached. Listing the Stocks When a department is ready to begin listing its stock, it will secure the sheets from the main office, where a record of the time at which the listing in each department is begun, should be kept. The head of the department or other com- petent person should go through the stock calling off each item in its order to be listed by an assistant on the inventory sheet. It is important that the person making the entries should call back each item listed in order that there may be no mistakes in the quantities and prices. In addition to list- ing the quantities and prices, the party entering should be very careful to get the correct season letter. The form of inventory sheet. Form 26, shown here provides a column in which to enter the prices before inventory and prices after inventory. When the prices before inventory are not reduced, it will not be necessary to make any entries in the "price after inventory" columns. When the price of an article is reduced, the price before inventory should be entered in the first column and the reduced price entered in the "price after inventory colum.n;" the prices on the price tickets should then be changed to correspond. Reductions in prices should be made only at the time of listing, and not at the time of counting the merchandise. If, however, during the process of counting, certain items are located which should be reduced, 78 DEPARTMENT STORE STATISTICS these may be placed together to be later taken up specially by the department head. Listed Goods Sold While Listing If the listing is done while the store is in operation, it frequently happens that some articles may be sold after they have been listed on the inventory sheet, and before the listing is completed. In such instances it will be necessary to keep a list of all such items sold at both cost and selling values, and that this list be turned into the office with the inventory sheets in order that the amount so sold may be computed and deducted from the amount of stock listed. See entry on Form 27. A convenient form upon which to list such articles may be prepared by taking an extra inventory sheet and writing plainly across the top "Listed Goods Sold While Listing." In the Ojfice As soon as each department has finished listing its stock, the department manager should sign under the last entry made on the last sheet used, as illustrated by Figure 26, show- ing the date on which the listing was closed. These sheets should then be sent to the office to be extended, examined, footed, and recapped. Eixtending The extensions should be made at the prices entered in the "before inventory" columns when the prices have not been changed. See items No. 1, No. 2, and No. 5, on Figure 26. When the price has been changed, the extensions should be made at the reduced price or at the price entered in the "after inventory" column, shown on Figure 26. See items No. 3 and No. 4. Whenever the after inventory column is TAKING THE INVENTORY 79 INVENTORY Xk.-.<.^~ 5/. /y,^ D,p.«„,„, X- 4>-Ur,..*^ a^S..^^'^ "^^ p.„ ^^-i-^. (y "=™ «„,.«. 1 . EMtM .oTm. ■uuMnici 1 »i CJMIM .S^''l. £?; " "•; •»' //.^ - / .».. w.» * 2 3 L.. s g* «.• -• ^ / ,,Co fflS ^ fo * 8 a 1 o t,r P .< Oo 3 v-»^ i foe * ? ^il° / yijLro ^ /O / LLoo Ja j-o 2 ;L£ii ri j-« Ot^CL^ 11 1 aLa %' <^&o ^7 >o%c i?3 7 2^ ^ „.. j!iUX.^ S—^^ <^»<.c^ /l .t It'" U o ot. ^ It. /IS3o at V to 3C 7-#« 3: Tlsf rt ,<^/. ;f,^,>,t- ^ I? g^£s if a r o e VD l_oSe> i£ .iito // 5?f^^ ?! j.a^ ^ .»«:- .f— i^-^- S«^ a 3-3/. Ao,_. ,. ..^ f L..on...»Js..— ^ - <3.nii, >» / !<•/.* 9 1! 1- ■, fco ZJ ^:Kc J- -Z.a-*' ,J r'^Z ?7'i «,- »•»,«. . >ra s. .s o Q- "t ,t - 2 1 i.^~f C - '1 It. - I (.T . .J- i^J o /o 8 . ?.,,<■;,. . 7£-£-'^' Sa^^JC^- /7J-- -f • J< i o/ o.i » ,.mo-s«n-o....n,™«. ,....« .>.^...= : ^.: 1 Figure 27, Department Inventory Recapitulation used, an additional extension must be made into the reduc- tion columns; this is done by extending the difference be- tween the price before inventory and the price after inventory Recapitulation When the extensions have been made and examined, the inventory sheets should be footed. Each page should be 80 DEPARTMENT STORE STATISTICS footed independently, not carried forward in the ordinary way, and the total of each page should be recapitulated on a separate sheet; see Figure 27. The items listed on each sheet should be footed according to season and a memorandum of the amount belonging to each season should be made on the sheet, see Figure 26. When a department has been completed, the total amount on hand from each ''season" should be ascertained and entered on the department recapitulation sheet. If the stocks have been subdivided in such a manner that it is possible to ascertain the amount of each class of merchandise on hand in each depart- ment, a memorandum of this should also be made on the department recapitulation sheet; see Figure 27. Goods Placed in Stock from Time Listing Closed Until End of Fiscal Year A careful record should be made of all invoices that are passed for goods placed in stock from the time the listing closed until the end of the fiscal year. If it were always practical to list the stocks in all departments on the last day of the year this operation would not be necessary. If the office is careful to see that all invoices for goods placed in stock before the listing is begun, are properly entered on the purchase record before the inventory sheets are given out to begin listing, and will place a mark on the purchase record showing the last entry made for goods placed in stock before the listing was begun, the matter of keeping the record of goods placed in stock after listing will not require much further attention. TAKING THE INVENTORY 81 INVENTORY,-*!^...!.!.^^/ yn/J DMUrtnunt c-.'2^--«J. f^ «--.*■.' Cl.».l«»XE.-^<-/ Pua ^ ^ ' ^ F.t.nrf U.*^/ Cri„rf hw 1 «,«. "SS- /Vl/»i?«-«//» COT MICE fxivntm .»^TU» •iu.-y>. " wa i% /v a»li J J-o if'-r. li_-il. 3 .o / 2 ?' 2£ ^ = 245 '3 3,*-7. /4< r-To 77-^ 2, ' It? ., So ' •* ST-Z / 7 2 7.' L,«4.J- 2» ,, ?« /» ••.5- >$■«-' 7- Ji^o Jo •y 1 1« -4 ^2i;: ; < 'I- ^'l- '^ 2»Yi 7 o^ -7 ^/-'^r tSD Lo ttf -« 37^Z '7' fo^o 2 c -i^ii 1» ^s to J -7*"^ '•^ wa^X ?'■? 7 4 4 ;^ s.c^Z s V°' ?/o .fi-'y: / !2.r<, 33-^Z :i4x / t^fo 2/ tJ-i-o a -°^ */3. 3v^^ <;< J^?£ 3'f{ ;.itj. >,< 4 o •'^ 3^-^X i (,^7 4 o fl/y _ ««,-'X y f ¥» 7 Jo 1 l^^%. We therefore deduct 37j/^% from $350.00 and enter the net amount in the "cost extension" column and the gross amount in the "retail extension" column. These amounts are then deducted from the sum of the stock on hand at the time the listing closed and the amount placed in stock from that time until the end of the month. This brings the final figures for the department down as of the date, January 31, 1913. Final Recapitulation Figure 28 illustrates how the final figures of each depart- ment are assembled, showing cost value, cost reductions, sell- ing value, and selling reductions, and the percent of Mark-Up shown by each department. For convenience in handling, the loose sheets should be placed in "spring back" holders until after the final recapitu- lation has been made. After the inventory has been closed, the sheets should be transferred to a post binder for permanent keeping. This binder should be arranged with division sheets to facilitate ready reference at any future time. CHAPTER VIII MERCHANDISING STATISTICS (PRELIMINARY) PREPARATORY to entering a new season, the success- ful merchant lays plans and prepares charts by which to be guided during the coming season. A convenient form for a six months' preliminary plan is illustrated by Figure 29. A sheet like this is used for each department. On this is first entered, on the line opposite " Last Year," the following data taken from last year's records : 1. Retail Stock, first of each month and close of period. 2. Retail Purchases, for each month and total for period. 3. Sales, each month and total for period. 4. Mark-Downs, each month and total for the period. 5. Expenses, each month and total for the period, together with relative percent by months and for the period. It is on the basis of these five premises that the prelimi- nary plans for the ensuing period, this year, is based. Expense Determines Requirements Of these five premises, expense is the one which, to a great degree, determines the necessary volume of sales. On a columnar sheet in the manner illustrated by Figure 30, post DEP'T PRELIMINARY SIX MONTHS' PLANS Period, from J-*^. f , 19 it- to ^a^U^ 2^ . ^-?/l RETAIL STOCK . On Hind u j tjt- B«ginaing o( Period .* 3 3. j o a Dnircd It End of Period fi I ^C ^ o o a ^— INITIAL MARK-UP REQUIRED 3^ % MAXIMUM STOCK ^ 2J , ^ a o .^^ MINIMUM STOCK -# /3, kC a a. — MARK-DOWNS ALLOWED :? /, fa p t . April Miy ~£tu^ti)ckju Month: Lui Veir Plin Reiult 2vf, 7« » ,33. 8i J 7i ??y a y, >ga a. ..Zo^ 't-Ti^ ^'.T^l a fc«, Q a ^ a^, t,-7 o 31., -1^3 Jxt-*f /7.?*7 ^.^7^ Retail Purchim: Lilt Yeir . Plan. Reiull -^f^ /, y-gg 2^», J« »<; « a. J- -A^ a», ^o <» Silet: Lm Yen . Plio. Knult . •f, a*-7. ^^-z MJO. jj°-Z -5^ iS j'j-'T. g.7. ^9'-Z Figure 2Q, Six Months' Preliminary Merchandising Plans MERCHANDISING STATISTICS 85 the total expenses for each of the departments for the corres- ponding period the previous year. In the columns at the right should then be entered under the respective headings, 1. Percent of Initial Mark-Up Required. 2. Percent of Mark-Downs Allowed. 3. Percent of Net Profit Desired. With this information tabulated, the next step is to calculate, on the basis of Initial Mark-Up, the Sales required to pay expenses equal to the previous year, after allowing Mark-Downs determined upon, and still leave the desired Net Profit. Calculation Illustrated In the illustration. Figure 30, Department No. 1, having expense of $9,713.00, maintains an Initial Mark-Up of 35%, is allowed Mark-Downs equal to 2% of the Sales, and a Net Profit of 4% is expected. The ordinary arithmetical solution of this problem is, $9,713.00 - [35% — (4% + 2%) ] = $33,493.00 With the Slide Rule, the calculation is made in the fol- lowing manner: FORMULA No. 13 Set %Mark-Up— (%Mark-Down + %Net Profit) Over Expense Under 1 Find Required Sales The setting for the above stated problem is, FORMULA No. 14 Cj Set [35% — (4% -f- 2%) ] = 29% Over 9,713.00 Under 1 Find $33,500.00 Ok CO a < < 2 cr- ^ «« «] c« t^ V O ^ 2q ^Id- QUfi^h n lO 0^ ^ (i e ti c Q ♦0 mA **3 <5c t0 ^^ c 9 oo & h MERCHANDISING STATISTICS 87 Required Sales vs. Sales Previous Year In order to judge the possibility of meeting the "required sales," the sales of the previous year for each department are posted beside "Sales Required" as shown on Figure 30, and then an arbitrary amount which is believed possible to obtain should be determined upon and entered under the caption, "Sales Plan." In the illustration, Figure 30, while the Required Sales for Department No. 1 are $33,500.00, the sales of the previous year were only $27,763.00, and conditions being such that it is doubtful if the Required Sales can be reached, the arbitrary amount, $30,000.00, is decided upon. Determining Amount of Stock to be Carried The next step is to prepare the table shown as Figure 31, which will be called the Preliminary Stock Plan. The aver- age stock carried by each department during the last year is entered in the first column of this statement, and under the proper heading, the sales for the corresponding period. In the column, "Days to Sell," enter the number of days which should be required to turn the stock once ; a stock which should turn three times a year should turn once every hundred days, and to turn four times a year should turn once every seventy-five days. Turnover Calculations Making turnover calculations in the terms of "days to sell" is much more satisfactory and much more readily com- prehended, than w^hen made in the terms of "times turned annually." If the standard last year in a department was 125 days and it is desired to obtain a more rapid turnover this ~ 3 5 • « « c 9 9 c ^ r •5 •i' X V V < > wO, ^ >. ■ I CI / 3- ft i 5 u .1 n3 ^ ^ >. ••^^ CO «' <> > u ^S - \ <*> ':* «i n5 '1 C^ 3-^ u >» Vi s n ( V E ». 2 •> «* 2 C rt «> i> ^ > « h • >^^J> ^ N." ci r ^ n •o" \ ««> Ci rt n >j ^ <*5 I? *i QU&.H ■s CI n ^ ^ sj / / 1v Figure 31, Six Months' Preliminary Stock Plans MERCHANDISING STATISTICS 89 year, it is much easier to watch when we set the standard at 110 days than by attempting to change the rate of turnover from 2.4 to 2.72 turnovers annually. In a later chapter, the method of periodically checking up the rate of turnover will be further discussed. After thoroughly comprehending the significance of the term " Days to Sell," it is the purpose at this point, to show how it is used in connection with the sales of the previous year to determine the amount of stock which that volume of business justifies. Stock Calculations Illustrated By ordinary arithmetic, these calculations are somewhat tedious. Assuming that there were ISO business days in the six months' period under consideration, it would be necessary first to divide the sales for the period, for each department, by 150 to arrive at the average day's sales, then multiply the result by the "Days to Sell," required of each department. It will be seen that a problem of this kind resolves itself into the proportion: Days ) . \ Days Last Stock in Period i | to Sell Year's Sales " Justified which for Department No. 1 in the illustration becomes 150 :90 :: $27,763.00 :X= ($16,200.00). The formula for performing these calculations on the Slide Rule is FORMULA No. IS D Set Days in Period Over Days to Sell Under Sales for Period Find Retail Stock Justified 90 DEPARTMENT STORE STATISTICS and the setting for the calculation of the "stock justified" for Department No. 1, in the illustration, Figure 31 is FORMULA No. 16 c Set 150 Under $27,763.00 D Over 90 Find $16,200.00 Buyers to be Consulted At this point, the General Manager should call the buyers in, one by one, and with them go over the figures which have been prepared for their departments. Sales and Stock amounts should be carefully weighed, one against the other. Brown, the buyer for Department No. 1, insists that it is not possible to sell $33,500.00 worth of goods in the department in the next six months, and it would be poor policy to tell him that he must agree to sell this amount. Brown should be led to see the importance of increasing the sales in his department, and should agree to as much of an increase as he thinks will be possible. Brown's present Retail Stock is $23,800.00. (See Pre- liminary Six Months' Plan, Figure 29). His average Retail Stock for the period last year was $25,000.00, while the Sales for the period justified but $16,200.00. (See Figure 31). The turnover in the department for the period last year was unsatisfactory and the profits suffered accordingly. Brown admits that it is impossible to obtain satisfactory profits with- out securing the proper turnover, and finally promises that he will reduce the stock to $15,000.00 by July 31st Inventory, and he agrees to sell $30,000.00 in the next six months' period. It is decided upon that the department should be operated with an average stock amounting to $18,000.00, that it should never exceed $27,500.00 and should not fall below u z f o w < u) g ft, u o « U. C on M 4> CQ V ^ a)CU Qweuh be' (^^ <5q ^ Vi w Os. oc ■» «> '^ (J- K> 0- Co n5 r^ ^-^ Fiffure 32, Six Months' Preliminary Expense Plans « *^ 0(^ r rt o «« >/ O 92 DEPARTMENT STORE STATISTICS $12,500.00. These plans are then entered on the Preliminary Sales Plan, Figure, 30, and the Preliminary Stock Plan Figure 31. Revising the Expense Plan At the beginning of the chapter it was stated that the amount of a department's expense determined, to a great de- gree, the volume of its required sales. So that, now, as the " Sales Plans," Figure 30, may differ from the '' Required Sales," there must be an adjustment of the '' Expense Plan." If the department cannot do enough business to justify its expense, then the expenses must be reduced to be in proportion to the volume of its sales. Figure 32 illustrates how this revision is made. In the first and second columns, enter the Required Sales and the Sales Plans, respectively; then calculate the percent of change between the Required Sales and Sales Plan entering same in the third column under " Change." These calculations are made by dividing the difference between the two amounts by the Required Sales. When the Sales Plan is less than Required Sales, the character minus ( — ) is placed before the percent of change, and the character plus ( + ) when the plan is more. In the next column is entered the Expenses for the cor- responding period last year. These, according to the calcula- tion of Required Sales, Figure 30, are justified on the basis of Required Sales and should be increased or decreased in proportion to the increase or decrease in the Sales Plan. These amounts are, therefore, now multiplied by (100% — Decrease %) or (100% + Increase %) to find the Expense Justified on the basis of the Sales Plan. MERCHANDISING STATISTICS 93 The formula for performing these calculations on the Slide Rule is FORMULA No. 17 Set 1 Under (100% + % Increase) D Over Last Yrs. Expenses or C Set 1 Find Expense Justified Under (100% — % Decrease) D Over Last Yrs. Expenses Find Expense Justified For Department No. 1, the setting is FORMULA No. 18 Set 1 Under (100% — 10.5%) = 89.5% D Over $9,713.00 and for Department No. 2 Find $8,700.00 FORMULA No. 19 Set 1 Under (100 + 5.8.%) = 105.8 Over $7,600.00 Expense Plan Find $8,050.00 The General Manager should then review these figures and decide upon the amount of expense which will be allowed to each of the departments for the coming period. When the Expense Justified is less than the Expense Last Year, it should be the basis for the Expense Plan, but when the Expenses Last Year show less than the Expense Justified, the former should be used. The principle is, "be quick to cut down expenses, but slow to put them up." The Expense Plan is, then, as all other "plans," an arbitrary amount which it is believed reasonably possible to attain. 94 DEPARTMENT STORE STATISTICS Sensible Plans, an Objective Point In making these plans, the amounts decided upon should, in all cases lie within the limits of possibility. It isn't always a matter of ''how much you would like to sell" so much as "the amount which you will be likely to sell." Location of the store determines the volume of business which can be counted on and this in turn determines the amount of stock which may be carried in order to secure a proper turnover. Turnover is the thing which cleans up stocks and increases profits. A merchant in a town of 5,000 cannot expect to sell as much merchandise as the one in a city of 50,000, and his stock should be proportioned accordingly. Completing General Preliminary Plans Having finished the statements illustrated by Figures 30, 31, and 32, it remains to complete the information required by Figure 29. The plans for 1. Retail Stock Next Inventory, 2. Sales Plan for Period, and 3. Expense Plan for Period, are entered in the "Total Column" opposite "Plan" in the proper division. Information at Head of Preliminary Plan Sheets The Retail Stock at the beginning of the period and the amount to which it is desired to reduce it by the close of the period are entered at the top of the sheet, as well as the maxi- mum and minimum stock to be carried, together with the percent of Initial Mark-Up and the percent of Mark-Downs allowed. MERCHANDISING STATISTICS 95 Enter Total Mark-Downs Allowed From the percent of Total Mark-Downs Allowed, posted at the top of the sheets, the Total Amount of Mark-Downs Allowed for each department is calculated and posted under "Total" on the Preliminary Plan Sheets opposite "Mark- Down Plan." These amounts are calculated by multiplying the department's Required Sales for the period by the percent of Mark-Downs Allowed, Calculating Purchases Allowed This done, all the "Total Plans" for the period will have been entered except the Total Purchases allowed, which is yet to be determined. In the illustration. Figure 29, it will be seen that the stock for Department No. 1 is to be decreased to $15,000.00 by the end of the period, which means a reduction of $8,800.00, at Retail. The Sales Expected, is $30,000.00 and the Mark- Downs Allowed, $600.00. So, by adding Sales and Mark- Downs and deducting from this the "stock reduction" desired, the Retail Purchases which can be allowed is obtained. Thus we have for Department No. 1, Sales $30,000.00 Mark-Downs 600.00 Total $30,600.00 Less Stock Reduction 8,800.00 Retail Purchases Allowed $21,800.00 This is computed for all departments and entered on the preliminary plan sheets. 96 DEPARTMENT STORE STATISTICS Monthly Proportions The next step is to calculate the Monthly Proportions for Purchases, Sales, Mark-Downs, and Expenses. In the ordi- nary way we would divide this year's plan by last year's result to find the ratio, then multiply each month's result, last year, by this ratio to find this year's monthly plan. The Slide Rule greatly simplifies this. Under the head- ing, "Proportion," in Chapter II, it has been stated that one of the underlying principles of the Slide Rule is that no matter in what position the rule is set, all numbers on the slide will bear the same ratio to the coinciding numbers on the rule. The Proportions Illustrated To perform these calculations on the Slide Rule, the fol- lowing formula is used : FORMULA No. 20 Last Yrs. Under Each Month's Results Set — Total Results Last Year D Over— This Yrs. Find Each Month's Required Total Plan Results This Year and by setting the Purchases for Department No. 1, last year, to coincide with the Purchase Plan this year, we have FORMULA No. 21 C Set $22,300 JO Under ' fc SS : etc. 1 o I etc. Over $21,800 Find Sales, Mark-Downs, and Expenses are proportioned in the same manner. MERCHANDISING STATISTICS 97 Calculating Monthly Stock Plan With the Retail Stock at the beginning of the period, and the Purchase Plan, Sales Plan, and Mark-Down Plan, next calculate the Stock Plan for the first of each month in the period, in the following manner: Retail Stock, February 1st $23,800.00 Purchase Plan, February 5,425.00 Total $29,225.00 Sales Plan, February 4,300.00 Difference $24,925.00 Less: Mark-Down Plan, February. . 000.00 Retail Stock, March 1st $24,925.00 Continuing, these stock balances are figured to the end of the period, and entered on the Preliminary Six Months' Plan Sheets. Percent of Expense The percent of expense to sales is then calculated, and the results entered in the spaces under the amounts of expense by months and in the "Total" column. The formula for per- forming these calculations is, FORMULA No. 22 c Set Month's Sales Under 1 D Over. Month's Expense Find % Expense Buyers Should Be Given Copies of the Plans Each buyer should be given a copy of the Six Months' Preliminary Plan, Figure 29, for the departments over which 98 DEPARTMENT STORE STATISTICS he has control. Extra carbon copies may be obtained without much additional labor, either by having the information en- tered on this form, typed, or by using a manifolding pen and pen carbon. It might be said, here, that one of the best known ways to develop a department head into a high grade merchant is to let him feel that he has a part in the planning, thus placing a certain amount of responsibility on his shoulders, and then to keep him posted with real facts about his department so that he may be able to reach sound, logical conclusions. This will encourage him to break away from "rule of thumb" methods and adopt sound and sane methods for operating his depart- ment. Posting Actual Results to Plan Sheets When the Preliminary Plan Sheets have been completed, they should become the property of the General Manager, or Merchandise Man. At the close of each month, the actual results obtained in every case, — Stock, Purchases, Sales Mark-Downs, and Expense, — should be entered on this form (Figure 29) in the spaces which have been provided. In this way a comparison is obtained which will prove very helpful in dealing with merchandising operations. CHAPTER IX MERCHANDISING STATISTICS (WEEKLY REPORTS) IN reply to a question which has often been asked, "What reports should be given to the General Manager of a store in order that he may keep thoroughly posted on Mer- chandising Conditions?", it will be proper to first here give a list of such reports and then explain how to prepare them. The "figure number" opposite the title of each report is the index to the illustration of the form of the report in this chapter. All the weekly reports should be in the hands of the General Manager by Wednesday evening following the week which they cover. For the General Manager 1. Advance Sales Report Figure 33 2. Daily Sales Comparison Figure 36 3. Weekly Sales Comparison Figure 37 4. Weekly Purchase Report Figure 38 5. Weekly Turnover Report Figure 39 For the Buyers Supplementing the above, the buyers should get the fol- lowing reports which are explained and illustrated in this chapter. 1. Advance Sales Report Figure 34 2. Daily Sales Report Figure 35 3. Buyers' Weekly Report Figure 40 100 DEPARTMENT STORE STATISTICS ADVANCE SALES REPORT Sales Week Ended . . . A.c^ ^f ...19lV DEPT. MON. TUES. WED. THURS. FRI. SAT. TOTAL 1 45.17 38.16 42.25 47.10 33.18 62.35 268.21 2 134.78 113.02 129.17 119.62 118.12 200.47 815.18 3 117.50 92.10 115.10 96.50 127.03 109.95 658.18 4 202.10 236.20 201.25 248.25 348.12 461.61 1697.53 5 169.12 147.50 163.20 175.12 125.15 252.05 1032.14 6 200.19 169.70 215.18 189.19 107.13 441.61 1322.98 7 84.50 70.50 79.25 88.10 62.07 116.68 501.10 8 575.18 482.17 615.24 538.88 602.50 960.06 3774.03 9 97.25 80.13 91.10 102.13 71.37 134.46 576.44 10 45.50 46.17 59.42 52.12 47.19 114.21 364.6! 11 242.17 237.15 1 78.00 203.18 257.10 260.60 1378.20 12 82.50 75.12 61.57 69.25 77.50 101.88 467.82 13 18.92 16.35 18.25 19 67 23.95 17.89 115.03 14 348.75 339.79 254.63 292 10 371.17 319.71 1926.15 15 48.50 53.17 44.30 38.50 51.50 64.60 300.57 J6_^ _i^,9JL^ L^45^ ^_il*2iL- _i9JI. k_i2^ ___50M^ ^ 266.3 + J r— [ 1 — ' ' ■ ■ — -^ ■ - Toral 4015.32 .1650.83 3810.48 3760.42 4175.27 5923,85 25336.17 __ ■ Figure JJ, Advance Sales Summary for Merchandising Executives Advance Sales Reports for General Executives In order that the executive staff may carefully anticipate the sales requirements for each department, a weekly report of sales for the preceding year, as shown by Figure 33, should be prepared and given to them at least one week in advance of the corresponding week "this" year, so that they may have ample time to prepare for holding up the standard set. A copy of this report should be given to each of the exe- cutives, among whom, care should be taken to include the advertising manager. If this form is printed on "onion skin" WEEKLY REPORTS 101 paper and a soft carbon used, several copies may be made at one time on the adding machine. Buyers' Advance Sales Reports Supplementing these reports, the buyers should also be given advance sales reports for the preceding year. This report is illustrated by Figure 34. Keeping the buyers posted as to v^hat is expected of them, daily, is an incentive which should lead them to put forth their best efforts. The buyers should be taught to use these reports. For convenience in ■a- DEPT.../ Keep Your Eye on This Card LAST YEAR'S SALES From Mon i?.r.... to Sat. ..fl?^. Monday ¥.5^1. ./.7 Tuesday ♦?.i[: /.^ Wednesday J7f.?.,'..r^.>^ Thursday ^.7. .:,./. .9. Friday ?.^.i.J..K..... Saturday ^.?.:.A.^...... TOTAL r^.^jf.'. ._?./..... SLOGAN. •• WATCH US BEAT IT" Figure 34, Advance Sales Statement for Buyers 102 DEPARTMENT STORE STATISTICS handling, they should be printed on cards about the size of the ordinary business card, and each evening when the buyer makes up his report of the department's sales for the day, he should enter the amount this year above that of last, then at BUYER'S DAILY SALES REPORT DEPTT ^V OcJ~.:iS 101/ SALES NO. AMOUNT RETURNS NET SALES St. c 1 :2» vTvC 1 ■»7 J-S 5e>-K 3^ /a .^ Js- 1 1 ^o3 ZLo ^S n. 1^ li 3S "^c^ H-i 33 V / 3i SL o^ sS-o f 1 ^ ^0 f Ci-o L 3sr J 7

B 1 1^ 1^^^ /S'->-«--Cc>->iy^ Buyer Figure 3S, Buyers Daily Sales Report WEEKLY REPORTS 103 the end of the week he can make a comparison of the week's results and compare same with the report which is issued by the statistical department and may demand an explanation of any difference between the two amounts. Buyers' Daily Sales Reports It will be thoroughly appreciated that Sales Accounting to be efficient must present the results to the management suffi- ciently prompt to enable those in charge to use the facts while they will do the most good and before they become ancient history. To this end, the buyer of each department should be re- quired to prepare a sales report at the close of each day from the footing of the clerks' indexes, as shown by Figure 35. This is made in duplicate, one copy being retained by the buyer while the other is sent to the office that evening with the indexes. Daily Sales Comparison [Advance) The first thing the following morning, the auditing de- partment prepares from these reports, the comparative report illustrated by Figure 36. If these forms are printed on "onion skin" paper and a soft carbon used, several good copies may be obtained with one operation on the adding machine, and a copy should be given to each of the executives, includ- ing the advertising manager and the superintendent. Absolute Accuracy of these Reports not Essential It is not likely that the amounts on the Buyers' Reports will exactly correspond with the auditor's results, but for all practical purposes serves the present purpose as well. An important value of this report is that, when the audi- tor's report is rendered, if there should be a discrepancy be- SALES REPORT Tloxr^ 191>^ DEPT. THIS YEAR LAST YEAR DEPT. « » * 1 289.72 247.82 2 448.47 375.20 3 284.10 280.20 4 739.01 683.53 5 990.71 875.92 6 617.76 727.21 7 100.58 64.88 8 1,440.93 1,634.22 9 203.73 125.47 10 215.35 195.09 11 277.22 208.61 12 264.85 211.43 13 23.07 37.75 14 118.96*" 201.87 15 86.01 60.16 16 80.68 56.03 17 150.30 82.58 18 1.75 19 77.61 75.94 20 162.70 116.25 21 397.44 246.23 22 116.82 116.09 23 109.24 90.00 24 270.18 268.53 25 75.94 82.43 26 63.62 28.72 27 45.35 27.91 28 451.58 487.36 29 558.67 316.00 30 44.20 22.83 31 84.29 77.70 32 87.17 38.73 33 84.70 66.74 34 1,038.73 848.36 35 241.50 135.30 36 135.17 148.03 37 140.56 46.83 38 101.28 80.24 39 26.88 25.82 40 27.12 41 14.12 10,569.11* 9,414.01* . / /*.9t#- /oyii"», / '^ Figure 36, Daily Sales Comparison — All Departments SALES COMPARISON w«k ending ^.^ m^ s rOR TMt CURH5NI MONT« fc FOR THK REASON | | SALES BEDl'CTIONS SALES REDUCTIONS SALES REOCCTION. 1 1 TT- ~TT ^ nn l^L "Tl rf" nn Sf5- -TT ^ -TT rf^ ™ T^ "Tl ^ T "TT ff" "TT rP JL_ TT- "IT r ■ ^;r -* -^ Mtt; -' -- — ;:11^ ^^ ii^ -- i^ — _it<. - t ~^ -" p X , - li. , J , ^ -li • u. J J t -^ ^-Au; I'l. 33 J J X J , J , J ^ « .^r^u. .'T 1 f f' I a_^ ^ ,* S , ^ j4 I Jo Z«-2 .(*r - ii = 7J Q_ - ?i ' 5 / ri- £, t J . .. J .. j_ a 2 IV, 2 i i^ 3 XI - - 7 3 f ct LA « BJS 4 J3J- J ioJ ( ; j-> ' l2. J a^ ^ , ^ SI uat «!'■ « ,, , ^„ ,Ji 3 iV ( '*. . 11 l^i'-' ^sa t ai -32 l£A ^ - M "■■r f 'Z* /3. , . -•Ijl ,„-T J (. X3 "T , u'a f ■- 1 ' 1 *- * 7 (. '1- ^4,1. 3^^ 1 ,, If Ik ^ ^ ^ ,.,-- *. c lo /s ,„ ^ , t ;_ Tp *9if 2 3 /o ^ J Ui tsr ik u. ,, ^ "lir t ot I T , ,„ 1 /f f o? t* '-•U- _^ :--+!" zJ /- j£l , " £i L- 1 LJ-L lU iXJ L-llJ L-J- U — LLL L_U ■ J lJ iXJ "^ ■— u. -1--^ 1 — -=^ r- ---If -- -J ~i- — ' — 1 — T ^ = »£ T" "*■ ■=^ — - -^ -- - — — -- " — --- 1 '" J^ 7^« :ii ^£ £^ -^^ -:^ ^1 L12. _:i i± ii£ ^LZ ^. =ii:i if£ %iX =^! ^)L Ji :^ 4. J4«v a*!; .lal LLt -12 i^ = i .t^ .' u. Figure 37, Weekly Sales and Reduction Comparison— for llie Current Week, Month, and Se, WEEKLY REPORTS 105 tween the auditor's and the buyer's amounts, it is clear that somewhere a mistake has been made, and the difference should be immediately investigated and explained by the auditor. If this is conscientiously followed out, it will prevent credit- ing a wrong department through carelessness in sorting the checks, and will go a long way toward preventing collusions between salespeople and cashier, or between cashiers and audtiors. The Weekly Sales Comparison At the close of each week, the auditing department should prepare a comparative report as illustrated by Figure 37. This report, it will be seen, is divided into three sections,— the first for the week, the second for the month, and the third for the season. This report shows a comparison of the sales with the sales of the corresponding period the previous year, and a comparison of the percent of increase, or decrease, with the percent of expected increase for the season. The Slide Rule is used for calculating these percentages, the basis for which is last year's sales. The amount of reductions is also entered on this report, and a comparison made, similar to the comparison of sales. Weekly Purchase Report As soon as possible after the close of the week, a report of Purchases, Figure 38, should be prepared. Calculations Should he Based on Last Year's Business In spite of a promising outlook, it is good policy to be conservative in buying, and to this end it will be better to use as the basis for a Purchase Allotment, the purchases, at COST, o I bfi c -3 c O CA o & Ok >^^ bd 1 ~7 1 1 it 3 (5 / « / • « / : 1 / J ^ « «« ^ « t* s. S Al . ^ B- ► I* 9 « ■J ^ / a ■ ^ 1 4^ in ^ K N ^ 01 1 ^ r -J t r- ^1 1 > hi o r * - r- •4 -J « 9 - ^ L. r . > N "1 r— •< •• ^ » - r ^ > * A t~ r* , r- r e L -• > -« ^ 4 " '*} , n N r* lA *i ^ •« •1 6 H s •» 4 r- h * n t- •^ ti ^ •' V t* ^ ^ - j M * I 1 >* Id Q 5 ft 91 •1 > r \ I 5 f« . c - 1, r . ^ « <* 4 !* ■'. r '*] ^ . c (| ^ S oq a« •? r> » - f« r 5 • r - « , >t « v» •o "> t- > r« • c> ■J «■ • :i * 1 H ^ « > « oa "1 fr . — t* t- if to r - a 0- - 0< 9 ■ r ■ r 9- 8- ■ ■* « •* <» 1 >« M * r ^ « «. ^ , ^ <♦ «c 0<1 t~ . :» 1 «> -. J r o M 1* > s >* ^ . K . - 1 r oc o — %) o< » . ^ . « » ^ • t* ■ r« J » - Q * >• >. ^ a- -S « M 1 f- - ^ ~ i -™ ,0 1 r M ' in > o o h o 4\ «■ - >t » J « ^ h « > }• ^ r ~ r • ~ *i 0- t< J •* <« r- . >« ■o ff^ ' O «e •> U . > <»»j 1" ^ > > «t I* ~ I* >» •> ■o » . [ r ?^ >J rt »> t^ r» -» "^ '^ j • 1 t- 5-1 o o p Q * c « e 4/ 9 w o « » r . « r e « o { o t* t> lO (r • • ^ ^ U oq «■ - • vC lo \ "^ -J »■ . « r - *■ ■ in > r* r r» ^ M «0 \ v» > o Nl l« ri > ..t >4 to o o a •♦ T ^ >J ^ ^ ^ « ■^ r* "* — c • « • « I c « ' C ^ i ^ c Q « lO ri Kl » » ^ >3 s (< r ~ •* ^\ •» '^ •.« --. a C4 - -. f* ^ 1 ^ tn "( >J •-' ^ >■ ^ -1 ■- "■i rl V ' t* >• i 1 SqSz < 2 • « o o « c o • e f « o Q « < » . Q r , « ^ ■ 6 ^ o « 9 . Q f • Q •^ > N "> s Q 4 o fl «* ta • ■^ S >» " ^ t- ■ -- ^ o ^ -, ^ ^ d • 3^ M > -J 2 «^ ^ ^ t* "^ "^ ») X "* / ^ xaaa - H «r> t ^ -J r oo « . 5 - ^ fo ^ 1 < i 1 Figure 38, Weekly Purchase Report WEEKLY REPORTS 107 possible on the basis of "last year's sales" rather than on the basis of "expected sales." How the Calculations are Made The amounts entered in the first column of this report will be the same on every report issued during a season. The calculations of these amounts are made by deducting the total expected sales increase for each department, shown by the Preliminary Plan, Figure 29, from the total Retail Pur- chases alloted on same; then converting this into the cost equivalent by deducting the percent of Initial Mark-Up Required. For Department No. 1, illustrated by Figure 29, the calculation is made in the following manner: Purchase Plan (Retail) $21,800.00 Sales Plan $30,000.00 Sales Last Year 27,763.00 Sales Increase 2,237.00 Retail Purchases, Basis Last Yr. Sales $19,563.00 Less Initial Mark-Up Required— 35% 6,647.05 Purchase Allotment— COST $12,915.95 Change in Allotments Due to Increase or Decrease in Sales The comparative report illustrated by Figure 37 shows the percent of increase or decrease in sales from the preced- ing year. The Purchase Allotment should be correspond- ingly increased or decreased; if the sales have increased 10%, the Purchase Allotment should be increased 10%. There- 108 DEPARTMENT STORE STATISTICS fore, enter in the second column on the Weekly Purchase Re- port, Figure 38, a percentage of the original allotment equal to the percent of increase or decrease in sales, this year over last. Increases should be entered in black, and decreases in red, so as not to become confused one with the other. Season's Corrected Allotment The increases are then added to, and the decreases de- ducted from the original allotments to arrive at the total amount possible to buy for the period. These amounts are entered in the third column. Purchases Made Under this head, there are two things to be considered. They are : 1. Goods Received. 2. Unfilled Orders (For Current Season's Delivery). Goods Received The amount of goods received is represented by the total amount of invoices, at cost, passed since the beginning of the period. These amounts are obtained by deducting the amount of the inventory at the beginning of the period from the last cumulative total in the Stock Ledger, Figure 25, after the week's purchases have been posted and balanced. Unfilled Orders The amount of outstanding orders for the current sea- son's, or period's, delivery is obtained from the purchase order record. This record is explained in detail in a later chapter. The record should show a classification of the orders placed WEEKLY REPORTS 109 by each department according to month of delivery, but it is the total amount of all orders placed for delivery BEFORE THE END OF THE PRESENT SEASON which must be entered in the "Unfilled Orders" column on Figure 38. The total amount of "Goods Received" and "Unfilled Orders" for each depart- ment constitutes "Total Purchases Made," and these amounts are now entered in the respective column. Balance to Buy Having now determined the total amount possible to buy and the total amount already purchased, the difference be- tween these two represents the remaining purchasing power of the department, or the amount overbought. "Balance to Buy" should be entered in black and "Overbought" in red. Average Weekly Allowance In some stores, the "Balance to Buy" is further dealt with by converting it into an average weekly allowance. This is done by dividing the balance by the number of weeks re- maining in the period, and for performing these calculations, the Slide Rule again finds a ready use. Set the Runner on Scale D to coincide with the number of weeks remaining in the period, then by moving the Slide, for each department, so that the "Balance to Buy" coincides with the Runner, the weekly average will be found on Scale C, above either the Right or Left Index of Scale D. Comparison of Turnover Another line of information for the General Manager, and one which is often given a small place in the Accounting System, is that concerning turnover. Quick Turnover is the key to moneymaking. Volume of sales when in proportion 110 DEPARTMENT STORE STATISTICS to Stock is the point to look for. $50,000.00 sales is poor busi- ness if it takes $30,000.00 stock to do it. Quick Turnover will do more toward increasing the rate percent of gross profit finally realized than a high percent of Initial Mark-Up alone can ever do. WEEKLY STOCK STATEMENT Week Ended Tune 17. 1911 STOCK ON HAND THIS YEAR LAST YEAR INCREASE (RED) DECREASE (bLACk) DAYS TO SELL THIS VR. LAST Yl 1 2 3 4 5 6 7 8 9 10 8,490.92 6,442.98 6,618.23 13,791.86 6,866.99 7,970.22 3,515.19 11,040.23 7.176.28 6.608.75 7,650.21 9,898.57 7.248.30 12,096.94 5.304.10 11.544.42 3.166.41 10.137.15 6.874.59 7,735.77 840.71 3,455.59 630.07 1,694.92 1,562.89 3.574.20 348.78 903.08 301.69 .127.02 132 98 102 65 58 57 71 21 89 173 214 131 61 43/2 73 90 22 86 Total 242.759.92 229.236.16 13.523.76 89 91 Figure JQ, Weekly Comparison of Turnover Weekly Turnover Report The Retail Stock balances should be tested at least once each week to ascertain the rate of turnover. To make these calculations in the ordinary arithmetical way, Errata: $301.69 is increase. WEEKLY REPORTS 111 1. Divide the sales for the period by the number of business days since the beginning of the period, to find the average day's sales. 2. Divide the present stock balances by the average day's sales to find the number of days required to turn the present stock once, provided the same daily average is maintained. EXAMPLE $3,360.72 Sales in 76 days. Present Stock, $7,650.21. SOLUTION $3,360.72 -^ 76 = $44.22, Average Day's Sales. $7,650.21 -^ $44.22 = 173 Days to Sell. JVith the Slide Rule With the Slide Rule these calculations are greatly sim- plified. The operation resolves itself into the proportion, Sales for ] f Retail Stock 1 f Days since 1 f Days to Period \ : \ Balance {'-''{ beginning \ : -i Sell J [ J I of period J ' The formula for setting the Slide Rule is: FORMULA No. 23 c Set Sales for Period Under Days in Period D Over Retail Stock Balance Find Days to Sell Weekly Turnover Report Illustrated Figure 39 illustrates a convenient form for making a weekly comparison of stock balances, this year with last, show- 112 DEPARTMENT STORE STATISTICS ing increases and decreases in amounts carried, together with the comparative number of days to turn. In making the calculations of the "days to sell," this report is laid beside the sales report illustrated by Figure 37, which shows the total sales for the period, both "this" and "last" year. Set the sales for the period on Scale C, over the present stock balance on Scale D, and find under the number of business days since the beginning of the period to date on Scale C, the number of days required to sell, or turn the present stock on Scale D, — provided the same daily average can be maintained. Buyers* Reports The usefulness of these reports would not be complete unless the buyers were given the same information. Figure 40 is a form for the buyers' weekly reports. It will be seen that there are three sections: the upper section contains a statement of Purchases, Sales, and Reductions for the week ; the middle section contains a statement of the con- dition of Stock, Unfilled Orders, and Balance to Buy; and the lower part contains a statement of the Purchases, Sales, Reductions, etc., cumulative, from the beginning of the period to date, including the amounts entered in the upper section of the report. The lower part of this report is printed in red and the entries are made in red, while the other two parts are made in black. General Manager Should Review These Reports These reports should be given to the General Manager to review before being given to the buyers. If there is anything o STATEMENT WEEK ENDED t£«>^sa 1913 DEPT...::;?.?. 191?r 191^ Purchases (Retail) ..^,.1.^8.... . M.. Reductions ( " ) '-' — STOCK Balance on Hand (Retail) Days to Sell r^\ Unfilled Orders (Cost) Possible to Buy (Cost) Svf.f.. 2A. 43 S-ZfJ 3.,.^..s^.9 if SJ.. 3ZL LAST INVENTORY TO DATE Purchases ( Retail j| Sales ( •• ) Reductions ( ** ) Average Marked Inventory and Purchases Expected to Realize LL.S-13- REMARKS o Figure 40, Weekly Merchandise Report for Buyers 114 DEPARTMENT STORE STATISTICS of importance to which he desires to call the buyer's attention, a notation may be made under "remarks" before the report is handed to the buyer. Buyers Should be Provided with Suitable Loose Leaf Binders in Which to File these Reports These reports should be made to fit a loose leaf binder in which they may be filed by the buyers for their future refer- ence. If a bu3^er has charge of more than one department, his binder may be subdivided so that a separate section may be set apart for each department. CHAPTER X DISTRIBUTING EXPENSES IN carrying out the accounting scheme, insufficient thought is often given to the distribution of the various items of overhead expense to the different departments on a fair and equitable basis. On this subject there is also a great diversity of opinion. Some merchants view it as being merely an "embellishment" to what they would consider an already complete system; some think that the final results to the FIRM are in no way affected by making a careful analysis of the expense accounts so that one department will not be overburdened while another gets through with a dispropor- tionately light expense burden. With the store as a whole, so with the department as a unit, expense determines the requirements, and if the amount of expense be not logically determined, the conclusions as to the success or failure of the departments, in so far as they are based on the records kept, are not likely to be of much real value. The practice of distributing the overhead expenses in bulk, prorata to sales, has not only grown obsolete, but has been found hopelessly inadequate to the demands of present day business methods. In Chapter VIII was shown the im- portant part that expense holds with the volume of sales to be expected from a department. If the amount of overhead expense charged to a department was determined wholly on the basis of sales, poor business would in the end justify itself. 116 DEPARTMENT STORE STATISTICS The Expense Accounts which admit of a distribution direct to the department which receives the benefit, are: A. Salary, B. Freight, C. Advertising, D. Rent, E. Window Display, F. Insurance and Taxes, G. Department Expense. To prepare the total amount of expense for each of the departments each month, a sheet, such as is illustrated by Figure 41, Monthly Tabulation of Expenses, may be used. The expense accounts given above are taken, one by one, prorated, and entered on this form. Then all other expense accounts are distributed in bulk in the manner described in Section H, of this chapter. When the distribution and recapitulation of all is com- plete, the sheet is crossfooted, the total for each department being entered in the extreme right hand column, the total of which must agree with the total of all Expense Accounts on the General Trading Account for the month. A. SALARY The method of ascertaining the amount of salary earned by the employees in each department and making this the basis at the end of the month rather than the salary paid has been fully described and illustrated in Chapter V. (See Figure 19). The results of this distribution are posted to the Monthly Tabulation of Expenses, then with the Slide Rule, the percent for each department is calculated in the manner illustrated by Formula 6. 5 J ''^ — — — — 1! \ fl "' n 1 - ' 1; 0) liJ (/) z LJ Q. X liJ IL g" 5* • 1 _ ! §3 1 M 1 " |] 1 5 D CD X z 2 1 2 C ■■ - 1 Z 5 1 4 n 1 '" n 1 ■ 1 - , — — — — , — — — — — — ' ~ — ' — ■ ' ' A 3 , , -1 — — ' — — — — — — — — — ■ i L Figure 41, Monthly Tabulation of Expenses DEPARTMENT STORE STATISTICS B. FREIGHT AND EXPRESS* Freight charges should be distributed direct from copies of the original Freight Bills. ERIE RAILROAD CO.. on.. '- tu^ - '••<«• ie»r-J^ US xuT oooaa fsrs eirie: railroad co. DCLIVCRV RCCCiPT. 0tQfB Tmmf t imm. ft :__iifjji_ Figure 42, Freight Bill and Checked Delivery Receipt When a Freight shipment is received, the receiving clerk should obtain from the driver, the copy of the original freight bill marked "delivery receipt" shown in Figure 42. The buyer of the department to which the goods belong should be required to mark on this copy, 1. The Name of the Consignor, 2. The Department to which the goods belong, and 3. Sign with his initials. In this way there will be little danger of making the charge against the wrong department. These copies are then held on file until the "freight bills" are received, when they are checked off by the receiving clerk, the "freight bills" being sent to the cashier to be paid and charged to the general Freight Account, and the "delivery *NoTE — While the item of Freight is not an Expense but a part of the Cost of the Merchandise, many merchants classify it as an expense, and the writer con- siders it best to so classify it here, showing in a subsequent chapter, how the account may be more properly handled, leaving the choice to the individual merchant DISTRIBUTION OF EXPENSES 119 receipts" sent to the statistical department to be distributed to departments. At the end of the month, the total of the dis- tribution must agree with the total amount charged to the general Freight Account during the month. Express charges may be handled in a similar way, using the regular express receipts to make the distribution, after the cashier has used them in making settlement with the Ex- press Companies, although special form designed after the illustration shown as Figure 43 may be used, if desired. The only advantage gained by using a form of this kind is that the \ BL,AKK^-» Co. EXPEA-,SE ,SW1P ^^ 1 C/ishier:- \^ MTC Sru. Ho. SHjrrEK. Ai^trjTf ,^ . ^ r '- »»»» 1 Ilr.r/.^ V Htcurmo rAinttiT. -:- ', % ="j= Figure 43, Sptcial Express Receipt charges on all shipments received from one Express Company each day, are concisely recorded on one sheet and the record of amounts paid to all Express Companies are on sheets of uniform size for filing. With the use of a form of this kind, 20 DEPARTMENT STORE STATISTICS the Express Companies are not usually required to give receipts on their own forms, the collector's signature on this form being sufficient. ADVERTISING DISTRIBUTION OF ADVERTISING ^-'^-^('yx.^.^xyi^ , 191 "S Figure 44, Distribution of Advertising The distribution of newspaper advertising should be on the basis of newspaper space used by each department. The advertising manager should measure the space daily and make a recapitulation of same so that he can tell at the close of the month, the space used by each department and the space given to headings and general advertising. At the close of the month, the advertising manager should enter on a form designed after the illustration, Figure 44, the total space used by each department, showing the amount of space used for headings at the foot of the column "Headings and General." On the back of this sheet he should enter the DISTRIBUTION OF EXPENSES 121 names of the papers and the amount of space used in each, to- gether with the amount of the month's bill included in the dis- tribution. In this way, the main office has a means of know- ing that all bills have been properly charged up on the general books of account. The basis on which the headings shall be charged to the departments depends in a measure on individual opinion. Some prorate this space among the departments which have used newspaper advertising, according to the space which each has used. In this way, departments w^hich have done no newspaper advertising during the month will not be charged, with any of this heading space. Others contend that while some of the departments have had no newspaper advertising, the firm's name and the general announcements contained in the advertisements have bene- fitted all departments, whether the wares of all have been mentioned in the advertisements or not. To carry out this idea it is customary to make the distribution on the basis of sales. The distribution illustrated is made after the first method mentioned, and the formula for making the distribution of the heading space is, FORMULA No. 24 C D Set Total Space Used Over Heading Space Under Dept. Space Used Find Share of Heading Space If the distribution of the "heading space" is to be made on the basis of sales so that all departments will be charged with a proportionate part of the amount, use the following formula: FORMULA No. 25 c Set Total Sales Under Dept. Sales D Over Heading Space Find Share of Heading Space 122 DEPARTMENT STORE STATISTICS The advertising manager having, as stated, entered the names of the various publications and the amount of the month's bill rendered by each, on the back of the distribution sheet, the total amount of these newspaper bills are then dis- tributed among the departments prorata to the "total space" charged to each. This is done by dividing the total amount by the total space to find the unit, then multiplying the total space for each department by this unit to find the amount to be charged to each. With the Slide Rule the calculations are made by using the following formula: FORMULA No. 26 c Set Total Space Under Dept Space D Over — Total Amount Find Dept. Share of Adv. Newspaper Adv, One setting of the Slide is all that is necessary,— setting the total space to coincide with the total amount, — the results for each department then being found on Scale D coinciding with the "space" on Scale C. The difiference between the newspaper advertising and the total amount charged to advertising account on the general books is made up of salaries, and other miscellaneous adver- tising expense; enter this amount at the foot of the column headed "General Advertising," Figure 44. This must then be distributed. The distribution of this amount shown in the illustration has been made on the basis of Sales, but this may be changed to meet with individual opinion. To make these calculations, divide the total general advertising expense by the total sales, then multiply the sales of each department by this unit to find the amount to be charged to each. With the Slide Rule, use the following formula: FORMULA No. 27 C Set Total Sales I Under Dept. Sales D Over Total Gen. Adv. Find Dept. Share of Gen. Adv. DISTRIBUTION OF EXPENSES 123 Enter the amounts obtained for each department on the distribution sheet, Figure 44, in the column headed "General Advertising." Prove these amounts by making the total amount of same agree with the amount of General Advertising previously entered at the foot of this column; then crossfoot the amount of newspaper and general advertising for each department, placing the full amount in the column headed "total" ; the total amount of this column must agree with the total amount expended for advertising during the month as shown by the general ledger account. D. RENT In the distribution of rent, there are two factors which make it a somewhat complex problem. These are : 1. A square foot on one floor does not have the same value as a square foot on all other floors. 2. All locations on the same floor do not have the same value. The first step in the distribution of Rent is to set a value on each floor. Then on a sheet of sectional paper, draw a sketch of each floor, as shown by Figure 45 ; in this way it is easy to determine the number of square feet occupied by each department on that floor, no matter how irregular in shape that department may be. Assign "rank 1" to what is considered the poorest location on the floor and rank all other departments on that floor on the same basis, as shown in Figure 46, page 125. The rental charge, after being once calculated, remains the same from month to month, except as changes may be made from time to time either to accommodate a department during a special season, or permanently. The superintendent should promptly notify the statistician when such changes are made. ■■ I*11fl5" -aw»«irr ^.r m- ^5^ ^1 111 m -M ii- :&: :3J: R- ■ni ±z k: Ei: -inji ujl :2: -^S 7-\ tl _SL Figure 45, Diagram Showing How to Calculate Rent for Each Department DISTRIBUTION OF EXPENSES 125 D1STR.IBUTION OF RENT LOCA- TION D EPARTMENT SPACE RELATIVE VALUE COMPARAnVE VALUE AMOUNT ±A ^fP^^ /vC*V -v c^ »io\.Z.-a,^:^t,'- 'U-yj-'S-a-s.^.^iy / O O >- /.if- 3 /J /^ y^^ft-K-^^ '^o-O-dU^ ^^^«^ ^!l*.*^ fdtlMA..^^ lA^ /.2»£- ^ / / T yjr\jr ri>TfiL /^leryT ^^UJT >^ 7v^ Figure 46, Distribution of Rent E. WINDOW DISPLAY This is sometimes included in the distribution of Rent each month, but it is very desirable that it be kept separate. Assuming that the firm is in a rented building, the sum of rent and window display will make up the entire amount of the total rent paid each month. If the firm owns the build- ing, a journal entry should be made each month, charging -ni , 1 \ ^ Ij I. 1^ 1^ ^ ^ ^ b < H O Q ■a o ^ •4 ;> » a ^ > > > ■i ^ :*- :» V h r^ =:..= 1 1— ( 1—1 h Z & o S ^ ■j^ h < s ^ 0. is ^ Q S « 4 h ^^ z ^ o h < s a. 1=^0 u z^ o Q > ^ ^ ^ U ^ t u 1 h z t3 1 1 bo ! 1 1 1 ■^ >> V Q ^1) o h < it \ \ '^s '^i •j •^ !i \ T) •^b \ h z D O ^ ^ lo 1= h ^ ^ ^ A 1*) oo oo 1 Oo «Q iV fi - ^ ■^ ■^ •*l S / h < I S a. ?§ ^ > ft- <3- \ \ ''o Oo vj v» Q s h z ^ ^ ^ U u b - «o ^ ( '^ ^) J r~ <5to (T Q I / . n ^. ^ o I. > > ii > / ^ ^ p ^ ' ^ ^ rr M r< \ \ > ^ \ I ^ ^ / en rr 1 1 I . V > > \ \ \ I. -^ ~ I 1 M n 1 ^ / 1 ■i ' \ \ ^ ^ \ -J < -^- " r~ ^ ^ b ^ n rt rt rt OO n r-i Figure 47, Distribution of fVindoiv Display DISTRIBUTION OF EXPENSES 127 Window Display (Expense) Account and crediting Rent Account. This latter is one of the firm's own Profit and Loss Accounts, in which the departments do not participate. A value should be placed on each window, and the window trimmer should be required to keep a record from INSURANCE AND TAXES V^A-J^ryt^^.^. gl_-6xtY 191^ DEPT. STOCK UNIT AMOUNT S n ^T- i^o oczn 3^ t/'O 4x£-fa S 7- » 2^ ^c 1-L 2 3 7^ f-jL <^ <• So vS-o .^Jt^ ^ %A. tto 7«v ^5 ^4 B_0 3 4 o -a i£fc .i_^ / I U U.cf ^^ 3^ -^^^ IX .AX 0^ /0 ^ ^ 2 SLvT ^O //_ S ^ o 3 oA S^ S^ /v / fc 'S-ej 4 ^^ 4£> TOTALa«//fa«/ i (.1 ^o3gg «f vf o Figure 48, Distribution of Insurance and Taxes 128 DEPARTMENT STORE STATISTICS which to determine at the end of each month, the amount to be charged to each department for window display. Figure 47 is suggestive of the way in which such a record may be kept. F. INSURANCE AND TAXES The basis for the distribution of this charge is stock. Insurance on Merchandise Stock and insurance on Fixtures may be dealt with separately, and should be, if the records are so arranged that the value of the fixtures in each department may be readily determined. To make the distribution of Insurance and Taxes, enter on a sheet as illustrated by Figure 48, the value of the stock carried by each department and the total amount of "Expired Insurance and Taxes," for the month. In the ordinary arithmetical way this distribution is made by first dividing the total amount of "Expired Insurance and Taxes," entered on the distribution, by the total amount of Stock, then multiplying the amount of stock in each depart- ment by this ratio to find the amount to be charged to that department. With the Slide Rule, the following formula is used and it will be seen that this greatly reduces the labor necessary to make the distribution: FORMULA No. 28 c Set Total Stock Under Dept Stock D Over Total Ins. and Tax Find Dept. Ins. and Tax G. DEPARTMENT EXPENSE This is made up of charges made direct to departments during the month through the books of original entry, and the method of arriving at the total amount for each department is determined wholly by the arrangement of the general book- keeping system. DISTRIBUTION OF EXPENSES 129 H. GENERAL EXPENSE All expense accounts which have not been included in the distributions described are now taken in bulk and dis- tributed. These include such accounts as Office, Delivery, Administration, etc. Office Expense is affected principally by Purchases and Sales; Administration Expense, by Stock, Purchases, and Sales; Light, Heat and Cleaning, by Space and Stock. By a careful analysis of the factors which enter into a fair distri- bution of the "overhead," the following elements seem to form the best basis : 1. Space, or Rent. 2. Stock. 3. Purchases. 4. Sales. Prepare a sheet as shown by Figure 49. GENERA' P. YPPMSK J^ry...^ Y)\d DEPT SPACE STOCK PURCHASES SALES TOTAL AVERA-fC 1 / i 3 1 i. i ^/? X 3 '.r % i 37 7. IV Jf ^ >. r. ^ ^^ **? \< ^ S 1 7, 3 f. K ■/ ■2 * z 1 7- X i r s ri v„ |i ^ r 1.3 ■/If r. J H r. '41. Uc\ 7 3 r % 3 .9w y. t; ? li;? r. % r- io l.o « % r. r„ % vS o < r. fr ,Sl To 1 / a. 2,i^ r. 2 «. % /A r, r. 3 IS r- 3^ Lo iv' £ (^ %- i Z^ h V k^j V. ^ JJL ^ 2/ ^ K. ^ ^■ 7L ^ f,0 ~^ X~ ^= = ^^ == = = ■ =|p % '"°'"^'" ,oc H= % ... =L % ,,. H. r. /O o i= ^ Vo = ^ ^ ,o. ^ £ ^/ ^ 6 :^ 3i. Figure 49, Distribution of General Expense 30 DEPARTMENT STORE STATISTICS 1. Find what percent of the total rent is charged to each department; enter this percent in the first column. For performing this calculation, di- vide the rent for each department by the total rent. With the Slide Rule use the following Formula: D Set Total Rent FORMULA No. 29 Under 1 Find % Over DcpL Rent The total percent for all departments must equal 100%. Any small differences must be adjusted. 2. Find what percent of the total stock is carried by each department, and enter these percents in the second column. The method of making these calculations is similar to the one just described. 3. Find what percent of the total purchases was made by each department, and enter these in the third column. 4. Find what percent of the total sales was made by each department and enter these in the fourth column. Each of these columns will now foot 100%. Crossfoot these columns into column " 5," the total of which will then be 400%. Next, divide each of the amounts in column '' 5 " by four (4) to get the average for each department. Then mul- tiply the total "overhead" expense by the average percent just ascertained to find the amount to be charged to each depart- ment. CHAPTER XI PURCHASE ORDER RECORD P URCHASE Orders should be in triplicate and bound in books of convenient size, containing either 50 or 100 orders each, numbered consecutively in triplicate. An Order Should be Written for All Goods Purchased No goods should be purchased, except on this written order, properly signed by the general manager, or merchan- dise man, and the buyer. When goods are purchased by tele- phone or telegraph, a confirming order should be written and sent through in the regular way so that the purchase order record will be complete. In order to guard against a duplica- tion of the order, all such orders should be stamped plainly across the face, "Confirming Order — DO NOT DUPLICATE.'^ A Separate Book for Each Department A separate order book should be used for each depart- ment. A buyer should not be permitted to use one order book for several departments if he buys for more than one, but should be required to use a separate book for each. Neither should he be allowed to use one book for "this season's" orders and another for "next season's," but should enter all on the same book. Much confusion will be overcome if these restrictions are strictly enforced. How Copies of Orders are Handled As soon as an order has been written, the original should be mailed, and the duplicate sent to the office, while the tri- i! = = = = = = = ^ ^ ^= = = ^ = = ^ m m ^^ •0 c < S c « y- o »- ^ <; ><: ^ ^ fs 1)S <^ 5 b. ^ v> ^ 4^ X 4 <^ V, ^ C ^ Q Q Q Q •^J ^ h> A «<- N. , 1- z O f < 4 6 2 O ■a f "v. (is o ^ _ .;< ^ ^ Figure 50, Purchase Order Folder PURCHASE ORDERS 133 plicate is retained by the buyer for reference. It is customary in many stores, and is a highly satisfactory plan, to have the duplicate removed from the order book by the General Man- ager, or other official by whom the orders are signed, at the time he signs them. When this is not done, buyers sometimes withhold the duplicate copies for a length of time, thereby destroying the intended value of the Purchase Order Record, or making a lot of unnecessary work for the office in tracing these missing copies. Record of Orders Placed A most convenient method of handling the duplicate copies in the office and keeping a record of orders placed by each department is illustrated by Figure SO. This consists of a straight cut folder, size 9''xll%'', ruled as shown in the illustration. A separate folder is used for each department. Daily as the duplicate copies are received in the office, the record is made on the folder, showing in the left hand column, the date the order is placed; in the next space is shown the number of the order and above this in small figures, the amount. If several orders are placed on the same day, they may be entered one after the other on the same line, and if necessary several lines may be used for the orders placed on a single day. Distribution 1. A classification of the orders placed for delivery during each of the six months in the current season, and a column for the total amount of all such orders. 134 DEPARTMENT STORE STATISTICS 2. A column in which to enter orders placed in ad- vance for next season's delivery, with a small space in front of the amount column in which to write the month of delivery. 3. A column in which to enter the total amount of all orders placed by a department, for present season and future delivery. 4. Space for Remarks. Orders Should be Entered by Consecutive Number It is important that the orders be entered by consecutive number, in this way giving assurance that all are accounted for, and all missing numbers should be immediately traced. No excuse should be accepted from a buyer for holding an order from one day to the next. This explains the reason for restricting the use of an order book to one department, for if one book were used in several departments, the orders could not be recorded in consecutive order and it would be a very difficult matter to audit the record in order to know that all duplicates had been entered. Cancellations When orders are cancelled, the memorandum of same may be made on one of the regular order forms, and handled similar to the placing of an order, except that the entry on the folder for such a transaction will be made in red ink and the amount deducted from the total amount of orders placed when the folders are footed and balanced. PURCHASE ORDERS 135 Advantages By keeping the Purchase Order Record in this fashion, it is possible to easily determine the amount of goods ordered by any department, — 1. For delivery during each of the several months in the current period or season, 2. The total amount of goods ordered for current season delivery, 3. The amount for delivery next season (by months if desired), and 4. The total amount of all orders placed. Filing Duplicates Before Orders are Filled After the orders have been recorded, the duplicates are placed inside the folder until the invoice is received. Before sending the invoice to the receiving room, it should be checked against the duplicate order on file; by so doing, any goods which might be sent in unauthorized, will be caught up be- fore the package is opened. When only a partial shipment is made on an order, the amount received should be deducted from the amount of the order at the time the invoice is checked against it, and the balance carried as "unfilled." Arrangement in Folders The orders for the current month's delivery, may be left loose, numerically arranged, in the front of the folder, and those for delivery later, may be arranged according to month 136 DEPARTMENT STORE STATISTICS of delivery, fastened together with a paper clip, and placed back of the current month's orders, in the same folder. Weekly Report When the Weekly Purchase Report, Figure 38, is pre- pared, the amount of unfilled orders is ascertained in the fol- lowing manner: 1. Foot and balance all the folders. 2. On an adding machine, take a total of the cur- rent month's unfilled orders, in the front of the folder. 3. To this, from the footings of the columns on the face of the folder, add the totals of the orders placed for delivery during each of the succeed- ing months in the current period. This gives the amount of unfilled orders, while the folder shows the total amount of orders placed \ the difference be- tween these two amounts should represent approximately the amount of goods received. When Date of Shipment is Changed It hardly need be said that no goods should be allowed to come in before the date specified on the order. When the date of shipment is changed and goods are allowed to come in ahead of the date originally specified, a transfer entry should be made on the folder, transferring the amount from one month to another, making proper explanation in the space regularly used for recording the order number and amount. PURCHASE ORDERS 137 Figure 51, File Containing Purchase Order Folders Handling Folders Containing Unfilled Orders The folders containing the unfilled orders, when not in use should be kept in a vertical file. A convenient and inex- pensive arrangement is illustrated by Figure 51. These trans- fer cases are made in two sizes, containing 4 inches, and 6 inches of filing space respectively. They are made of heavy cardboard with hinged covers and drop fronts, so that the contents may be easily gotten at. 138 DEPARTMENT STORE STATISTICS Filing Filled Orders The filled orders for each department may be filed in a vertical drawer, arranged by departments, and the orders for each department should be filed numerically, so that when needed for reference, they may be easily located. CHAPTER XII FREIGHT ACCOUNT FREIGHT is often improperly classified as an expense, when in fact it is a part of the laid down cost of the merchandise. To illustrate: A merchant may have a stock of mer- chandise worth $200,000.00, bill price, which if lost by fire or otherwise, would cost him $202,000.00 to replace. In justice to himself, therefore, the amount of freight which he would be required to pay to duplicate his stock, should be inven- toried and carried as an asset, covered by his insurance so that in case of fire he will be amply protected. Freight Paid — An Unexpired Charge The freight paid on unsold merchandise is an unex- pired charge, which should be written off, only as fast as the goods are sold. Inaugurating a Strict Accounting The best time, perhaps, to inaugurate this method of accounting for freight is at the beginning of a new period or year. If an analysis of the freight and express charges as described in Chapter X, has been followed, calculate for each department, what rate percent of the total purchases of the past year was paid for transportation. This is done by divid- ing total Freight and Express charges for each department for the year by that department's total purchases. Then set aside the same percentage of the respective department's present stock to carry as an asset. 140 DEPARTMENT STORE STATISTICS Each month thereafter, charge the current month's distri- bution of Freight and Express to the Freight (Asset) account, and write off by Journal Entry, a percentage of the Cost of Goods Sold by each department equal to the rate percent of purchases paid for transportation during the previous year, charging same to the Cost of Sales accounts of the respective departments and crediting the Freight (Asset) Account. Adjusting the Account At the end of the period, or year, the Freight Accounts should be reinventoried, following the same method that was used to determine the amount of Unexpired Freight and Ex- press in the beginning. Any differences between this and the book account should be adjusted by an additional journal entry between Freight Account and Cost of Sales. Tliis book is DUE on the last date stamped below f^pp 2 2 ^.93! "p 1 7 i9r t library Graduate Sch-ol of Bur:in<^Rs Administratiott Un 1 ■ G r s 1 •-'■ ;/ . ■ f a 1 i f -,; rn i a }tOB JLa^eies 24, California ^ |0 , "jjSOUTHFRr/RfGlONAL MBRAR, f. A 000 179 165 6 LI BR LOS angel: