New-York tribune., 1919-09-02
knowledge of Costs
Key to Successful
Trade Competition
Producer Whose Selling
Price Is Based on Correct
Defferential. Writer Saws.
Operates With Courage

Success or failure Of manufacturing
projects will henccforth primarily be
determined by a knowledge of costs,
both for producing and selling, ac-
cordns to Ellery a. Baker. Of the Ma
tional City Bank Mr. Baker has set
forth his views on the subject in ar
article written for the August edition
of THE Americas published by the
bank
After the United States had declared
war on Germany. writes Mr.. Baker,
production and results became the
primc necessity in industry Costs
were relegated to secondary consid-
eration. Goods Mad TO be produced
irrespective Of costs, and expenses
were not watched. Consequently. at
the close Of the war. manufacturers
discovered that expenses had increased
in far greater proportion than either
productive payrolls or production.
Competition Is keener
"Now. however" Mir. Baker CON
tinues. war is no longer making its
Unsuitable demand for goods, but COM
petition has been made all the more
keen by our war exhausted industrial
capacity. and from now on q knowledge
of costs Will te the governing factor
III SUCCESS or failure.
\ cost system. according 20 Mr
Baker, should first give the final cost
OF the product and to be used as a
basis for establishing the selling price !;
and. secondly. TO give the cost and
progress Of the product by operation
thereby affording q means of control
and. III the event of any cost being ex-
cessive. to show the exact spot where
reduction can be made.
"The question of selling price is the
key of all business" Mr.. Bakers adds
satisfactory margin between cost and
selling price must 90 maintained, and
it become impe erative for the manu-
facturer to have q system operating in
mis- plant that will give him q CONNER
cially correct differential cost without
volumes Of detail and red tape.
Value of Cost knowledge
The man with the knowledge of
ohat his goods are costing him is IN
the position to name correct selling
price, and that knowledge goes long
way toward giving him the necessary
courage to do so irrespective OF the
price his competitor is n"KlnR. ne
man who allows competition alone TO
fix his selling price is indeed III dan
gerous position. It is not the manu-
facturer who knows the cost who is
feared in competition, it is the man
who is guessing at his costs and selling
below the market who causes chaos in
industry.'
The application Of a system to deter
mine the cost OF & product by opera
ton. and in that way afford means Of
control should, Mr. Baker believes. be
figured over period decided upon, the
length of that period depending upon
conditions and the nature of the in
dustry. The writer, in this connection,
favors monthly profit and loss show
ings.
Costs. under this classification, are
divided as follows BY Mr.. Baker:
Materal-That which goes into and
becomes a part Of the finished product
Direct Labor-All labor done directly
on the material in order to fashion i,
into the finished article.
Manufacturing Expenses ALI eX-
penses that have to do with keeping the
direct labor employed
Commercial Expense-All expense in
CURED in order to place and keep the
manufactured product on the market.