Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1916-09-30

chasing, stores. ETC.. are much less pr car 6an
in the case Of OBJ.
To illustrate, machine that costs (A) $25.4
900. costs thirty-three and one-third cents on
each automobile he turns out. It costs (B) two
dollars and half on each automobile he turns
out.
The same Is true OF salazies; the salary
Of a SIS, 900 engineer employed by (A) adds
only thirty-three and one-third cents to tho cost
Of the car, whereas if (B) employs man Of
equal ability and salary, his cost is $3.50 per
car. The same excess cost for OBJ occurs in
the case of purchasing agents. inspectors. fac
tory executives. superintendents etc.
With an annual $5.00O.000 factory over
head expense for GAY. his cost per car would
be $66.67, whereas $4,000. 900 overhead for
(B) would be $4,000 per car.
Quantity Production Reduces Costs
Quantity production reduces the cost per car
for item (4). administrative, selling and adver-
Using and general expenses, in the same why.
Surprising the annual expenses of (A) ara
$4,000. 900. the cost is only $50 per car. which
is much less than the average person imasines
this charge to be.
In the illustration, we have allowed (B)
$50 per car, which on a basis of 10000
cars per annum, makes his expenses $780,
900, which he can get through with II he
maintains no branch Offices but markets his
cars through dealers only In the case Of item
(5), quantity manufacturers (A) allow deal
ers smaller percentages of discount. usually
running from * to 25% according to the size
of the dealer, whereas smaller makers (B) AZ,
low from 20% to 40% discount. because their
dealers cell fewer cars and must therefore re-
ceive a greater discount per car 10 make q
profit. The expenses of dealers average about
the same whether they handle quantity pso-l
duction car or small production car. and mani
ifestly the dealers in the former case. sellin4i
seven and half times more cars than IN tho
latter case. can afford and actually do receivel
less discount per car. Again. the dealeEs
discount. at the Same percentage, amounts to|
more money, as the list price Of the car h-
crea.es. In the illustration it is shown a. 500
on the $l.l00 car (A) against $40 on tho
that quantity production saves the buyer $50
on this item.
The Makers Profit
What has been said regarding dealers dis
count applies with equal force to item co..
makers profit, which in the case of quantity
production (A) rarely exceeds 500 per car.
but in the case of small production (B) usually
amounts to at least 60% more. because Of the
latter maker smaller volume.
The large profits being made by small max
ers. which are matter of public record a.
shown by annual reports of these companies.
prove the truth of this statement. These
profits often run from $500 to 5000 ner car
for cars selling for less than $4,000. whereas
no quantity manufacturer in this country az
makes any such profit per car.
Any concern which buys its engines. axle..
transmissions. dferentials. steering gears,
bodies and tops. parts comprising 80% of the
cost of an automobile. from parts manufao-,
turers, is necessarily taxing buyers about 23S
premium because of this fact. This truth ex-
plains the difference in price of from $500 to
$500 in different cars on the market Of appar-
emily the same value, and this truth il well rec
ognized in the automobile industry.