VITAL TO KNOW COSTS.
|Topics: Edward F. Gerber
The New York Times
April 19, 1914
Gerber Tells of Methods Employed in Figuring Expenses of Manufacture.
Few dealers in automobiles and practically no users ever stop to consider the enormous amount of detail necessary to arrive accurately at the factory cost of a car, according to Edward F. Gerber, President of one of the motor car companies.
"To secure the exact cost of each of the 35,000 parts entering into an automobile requires more detail, more labor, and more vexation of spirit than the average man can readily understand," said he last week. "Yet for any manufacturing concern to be a success it is absolutely necessary to have some good system of arriving at the cost of its product. Cost records can be kept by many small manufacturing concerns without much trouble and expense, where their products do not differ materially. But with a large motor company the case is different. Its output is large and extensive, every car being made up of innumerable small parts. This makes necessary the installation of a very comprehensive department to correctly determine the cost of every finished car.
"To arrive at the figures, many actual tests must be made, especially in the machine shops and in the painting and trimming departments. Not only the amount of material used in the construction of each part must be figured, but also the labor cost and any waste in materials. While there is no great waste in the larger items entering into a car, yet the percentage runs high in a great many things. For instance, in cutting up hides for upholstering purposes the waste is very large. This is also the case with many of the smaller items, such as tacks, bolts, screws, rivets, paints, &c. An accurate amount is kept of each test, so that a fair and safe proportion of waste may be determined, and proper allowances made therefor.
"Every month the records of the past month are checked over and variations are noted in the record book, so that figures are always up to date. The work requires men of much experience in cost accounting, and in addition to this they must have a practical knowledge of the automobile business. It would not be possible for any novice to furnish even a close estimate of the shop cost of different parts, for many details have to be taken into consideration which one can master only by years of experience."
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