Bismarck daily tribune. [volume] (Bismarck, Dakota [N.D.]) 1881-1916, 1916-10-08

productive departments, such as experimental, en-.
cheering laboratory, purchasing stores, ETC., are
much less per car than in the case Of (B). s-.
To illustrate, machine that costs (A) $4,000.
costs thirtythree and one.third cents each auto
mobile he turns out. 1t costs (B) two dollars and
half on each automobile he turns out.
The same is true Of salaries; the salary of $685.,
600 engineer employed by (A) adds only thirty
three and one.third cents to the cost Of the car,
whereas if (B) employs man Of equal ability md
salary, his cost is $3.50 per car. The same excess
cost for (B) occurs in the of purchasing agents.
inspectors factory executives superintendent, ETC.
With an annual s., 100000 factory overhead ex-
pense for (A), his cost per car would be $6667,
whereas 100000 overhead for (B) would be
$4,000 per car =.,..s~@. "A. -s2~r>ss s&.:.
QUANTITY PRODUCTION REDUCES COSTS
Quantity production reduces the cost per car for
item.t(4), administrative, selling and advertising
and general expenses, in the same way. Supposing
the annual expenses Of GAY are $6000O00, the cost
is only $50 per car which is much less than the
erage person imagines this charge to be.
In the illustration, we have allowed (B) $50 per
car, which on basis of 10000 cars per annum
makes his expenses 100000, which he can get
through with if he maintains no branch offices but
markets his cars through dealers only. In the case
Of item (5 quantity manufacturers CAY allow deal.
ers smaller percentages Of discount, usually run.
ming from Is per cent, to Is per cent according p
the size Of the dealer, whereas smaller makers (BA
allow from 20 per cent to 40 per cent discount, b.
their dealers sell fewer cars and must there
fore receive greater discount per CIR to make
profit. The expenses Of dealers average about the
same whether they. handle |. quantity production
car or small prohibition ear and manifestly tho
dealers in the former case selling seven and half
tirnou n,nvo IN 1>%<
and actually do receive q less discount per car
Again. the dealer discount q The sane percentage
amounts 70 more money, q the list price of the car
increases. in tho illustration it is shown . $220
on the 81 100 car (A) against $270 on the $3.50
car (B) using 20 per cent in both cases, so that.
quantity production saves the buyer $50 on this
item.
]. . THE MAKER's PROFIT ......
What has been said regarding dealers discount
applies with equal force to item (6, makers profit,
which in the Of quantity production (A) rarely
exceeds 800 per car but in the case of small pro.
duction (B) usually amounts to at least 60 per cent
more, because of the latter makers smaller volume.
The large profits being made by small makers,
which are matter Of public record as shown by
annual reports of these companies prove the truth
Of this statement. These profits often run from
$500 to $500 per car for cars selling for less than
$1,000 whereas no quantity manufacturer in this
country GAY makes any such profit per car.
Any concern which buys its engines, axles trans
missions, differentials, steering gears bodies and
tops parts comprising so per cent of the cost of an
automobile, from parts manufacturers is neceluar-
lily taxing buyers about % per cent premium be.
cause of this fact. This truth explains the differ.
ence in price of from $500 to $500 in different cars
on the market Of apparently the same value, and
this truth is we'll recognized in the automobile in
dustry.