Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
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VOL. LXVIII. No. 12
Published Every Saturday by Edward Lyman Bill, Inc., at 373 4th Ave., New York. Mar. 22, 1919
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The Necessity of Keeping Track of Costs
O
NE lesson of the war which manufacturers in practically every line of business have learned, with
enduring profit let us hope, is the importance of eliminating waste and promoting precision in
business. While this was compulsory under the drastic ruling of the Conservation Division of the
War Industries Board, business men generally will recognize that what was endurable in war days
can voluntarily be continued in practice to a very large extent in peace times.
In the domain of manufacturing there has been a great deal of lost motion—a great deal of factory waste
that should, and can, be eliminated. Nothing is mope valuable to-day to the manufacturer or dealer than a
correct knowledge of costs, and this knowledge can be gained in no other way than through experience and the
use of an accurate but simple cost-finding system.
Conditions prevailing during the era of conservation and economy in war times have brought this fact
home to a great many, but now that we have launched on a new era of business activity following the war
it is more important than ever that production and distributing costs should be more carefully studied and
more accurately known, so that wholesale and retail prices may be maintained on a basis of actual costs. To
the manufacturer, especially, factory cost records are fully as important as the records of sales or purchases
on a company's books.
Whether participation in competition for foreign trade or development of a larger domestic trade are
in mind, one should not forget that all plans for expansion and the overcoming of competitors are impossible
of permanent success without an absolute knowledge of manufacturing costs and factory overhead in detail.
The factors that enter into and influence the cost of manufacture, either directly or indirectly, are
forever changing, and the man who expects to meet competition, and at the same time derive a reasonable-profit
from his business, must know just how much and where these changing factors are affecting the cost of his
products from time to time.
Not so very long ago in this industry pianos were being produced and sold wholesale and retail at a price
which demonstrated without any possible doubt that the manufacturers who sold them did not know what
it cost them to do business. This must be assumed, otherwise they must have had some philanthropic "bug"
which is not customarily associated with business practices.
This peculiar pastime of selling below cost indulged in sometimes by manufacturers would be all right
if it affected their individual businesses alone, but this practice undermines the entire retail market. It places
in the hands of the piano merchants instruments which may be sold at prices that give the public an erroneous
idea of piano costs, and it is a kind of competition that disheartens honorable and reputable manufacturers who
are paying their bills and conducting business on sound and correct principles.
Too much emphasis cannot be placed on the slogan "Know your costs," because on this depends the stability
and future of an enterprise. It is safe to assume that no man is in business merely as a pastime—he is in
business to make a fair profit on his investment. And this is only possible when he is in a position to know
definitely what it costs him to produce and sell his product irrespective of what his competitors may do. This
is the only correct procedure. Any other spells disaster eventually.
We are now in the midst of the so-called reconstruction period. There are many problems ahead to be
solved, both for the individual manufacturer and for the nation. In fact, 1919 presents possibilities such as
no year in history has unfolded, but we must not allow our enthusiasm to run away with our good sense.
Business must be predicated upon a knowledge of operative expenditure, and this is particularly important in
the piano industry, where the cost of everything that enters into the manufacture of a piano has assumed a
figure that necessitates the maintenance of right prices in both wholesale and retail fields.