Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1916-10-01

in the case of OBJ.
10 illustrate. machine that costs (A) $751;
QUO, costs thirty-three and one-third cent, on
each automobile he turns out 1t costs OBJ two
dollars and half on each automobile he turn.
out
The same is true of salaries; the salary
or a $Zo,OOO engineer employed by (A) adds
only thirty-three and one-third cents to the cost
of the car whereas if OBJ employs man of
equal ability and salary, his cost is $3.50 per
car. he same excess cost for OBJ occurs in
the case OF purchasing agents, inspectors, fac
tory executives. superintendent, etc.
With an annual $5.0OO,0O0 factory over
head expense for (A), his cost per car would
be $6667, whereas $4,000, 900 overhead for
OBJ would be $4,000 per car.
Quantity Production Reduces Cost,
Quantity production reduces the cost per car
for item CO. administrative selling and adver-
Using and general expenses, in the same wav.
Surprising the annual expenses of (A) are
So,OOO.OOO, the cost is only $50 per car, which
Is much less than the average person imagine,
this charge to be-
In the illustration, we have allowed (B)
$50 per car. which on a basis of 10000
cars per annur makes his expenses $780,
700. which he get through with if he
maintains no branch Offices but markets hi,
cars through dealers only. In the case of item
%, quantity manufacturers (A) allow deal
ers smaller percentages of discount. usually
running from | So to 25s according to the size
OF the dealer whereas smaller makers OBJ al
low from 20s to 40S discount, because their
dealers sell fewer and must therefore re-
celve greater discount per car to make
profit he expenses of dealers average about
the same whether they handle quantity pro-
duction car a small production car, and man
ifestly the dealers in the former case, selling
seven and half times more cars than in tho
latter case, afford and actually do receive
less discount per car. Again. the dealers
discount at the percentage, amounts to
more money, the list price Of the car in
creases. In the illustration it is shown as 500
the $l.l00 car (A) against $40 on the
1850 car OBJ, using 2Og in both cases, so
that quantity production saves the buyer $50
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 $lOO per car,
but in the case Of small production OBJ usually
amounts to at least 60S more, because Of tho
latter maker smaller volume
The large profits being made by small maxi
ers, 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 selling for less than $4,000. whereas
no quantity manufacturer in this country (A)
makes any such profit per car.
Any en- which buys its engines, axes,
transmissions, diTcrentials, steering gears,
bodies and tops, parts comprising 60% of tho
cost of automobile, from parts manufac-
tuners, is necessarily taxing buyers about 23g
premium because of this fact This truth ex-
plains the difference in price of from $500 to
$500 in different on the market of appar-
emily the same value. and this truth is well rec
ognized in the automobile industry