Tulsa daily world. [volume] (Tulsa, Indian Territory [Okla.]) 1905-1919, 1916-10-02

chasing, stores, etc, are much less per car than
in the case of OBJ.
To illustrate, machine that costs (A) $25..
600, costs thrty-three and one-third cents on
each automobile 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 SIS. 900 engineer employed by (A) adds
only thirty-three and one-third cents to the cost
of the Car, whereas if (B) employs q man of
equal ability and salary, his cost is ST. per
car. The same excess cost for (B) occurs in
the case Of purchasing agents. inspectors, fac
tory executives, superintendents, etc.
With an annual $5.O0O,000 factory over
head expense for (A). his cost per Car would
be $66.67, whereas a $1,000, 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 way.
Supposing the annual expenses of (A) are
$4,000. 900, the cost is only $50 per car. which
is much less than the average person imagines
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,
600, which he can get through with il he
maintains no branch Offices but markets his
cars through dealers only. In the case of item
S), quantity manufacturers (A) allow deal
ers smaller percentages of discount. usually
running from l5s to 25s according to the size
OF the dealer. whereas smaller makers (B) al
low from 20% to 40g discount because their
dealers sell fewer cars and must therefore re-
ceive a greater discount per car to make
profit. The 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 the
latter case. can afford and actually do receive
less discount per car. Again. the dealers
discount, at the Same percentage, amounts to
more money, as the list price of the car in
creases. In the illustration it is shown as 500
on the LOO car (A) against $40 on the
$3.50 car (B). using 20% in both cases. so
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 (6).
makers profit, which in the case of quantity
production (A) rarely exceeds $l00 per car.
but in the case of small production (B) usually
amounts to at least COZ more. because of tho
latter makers smaller volume.
The large profits being made by small max
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 $400 per car
for selling for less than $4,000, whereas
no quantity manufacturer in this country (A)
makes any such profit per car.
Any concern which buys its engines, axles,
transmissions. dfcrentials steering gears,
bodies and tops, parts comprising 80% of tho
cost of an automobile. from parts manufac-
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 is well rec
ognized in the automobile industry.
CLOSED CARS