CHAPTER VIII

COSTS

YOUR costs are made up of three classes of items: Labor of making; material they are made of; the container they are sold in. The other expenses of the doing of business are the “overhead,” so called.

To arrive at the cost of goods by the box and to know what profit you ought to expect, should be your first endeavor.

Selling is ninety per cent. of any business. To make sales enough to keep your plant going to its full capacity and be able to refuse undesirable business should be your constant aim. Then and only then are you making the greatest profit possible from your investment.

Your labor cost of making any piece of goods is easily figured. If a man, a boy and a girl turn out one hundred boxes in a day, the sum of the wages you pay them divided by one hundred gives the labor cost per box.

The material cost per box is easily found by finding how much raw corn it takes to give you pop-corn for a batch. Figure its cost. The candy and other materials you mix with a batch cost you a certain amount. Divide the sum of these by the number of boxes you get from a batch and add the cost of paper, string and box, then you have the material cost.

“Overhead” contains a large number of items and is the class of costs that is the worst to figure. It contains rent, heat, light, power, shipping, freight, express, cartage, advertising, printing, postage, stationery, insurance, taxes, repairs, depreciation, and all non-productive labor, such as sweeping out shop, bookkeeping, managing, etc. You must take these, figure the total for a week or a month, divide by the number of working days in the week or month, then divide by one hundred, the number of boxes made in a day. Then you have the “overhead” cost per box.

Add together the “overhead,” material and labor cost per box and you have the total cost per box if you are running your shop to capacity on that piece. Remember, in figuring your selling price and profit that making several kinds in a day increases the cost per box because of the time and labor lost in getting ready, and remember that some dull days will come when your “overhead” continues on just the same, but you have less boxes of goods to carry it.

Before you turn a wheel you should estimate your “overhead” expenses, and then watch them close to see that you do not increase them.

The manufacturing retailer receives one hundred cents of the consumers’ dollar. The wholesale manufacturer must sell to the retailer at a price at which the retailer can make a profit.

A wholesaler gets from sixty to seventy-five cents from the retailer for goods sold by the retailer at one dollar.

Some goods are sold for less but only at a reduced quality, or the loss of part of the legitimate profit.

When you put in new machinery that cuts cost you keep the saving in your own business. Talk quality, maintain the selling price and put part of your saving into selling endeavor to increase your business and the other part into a bank account. Cutting prices pays no one a profit.

You ask how much profit there is in pop-corn?

You know of fortunes made in pop-corn; some from buttered pop-corn; some from sugared pop-corn. Some from pop-corn cakes that sell for a cent, some from pop-corn packages that sell for five cents. In one case the goods were sold all retail, in another at wholesale. In one case a local business, in another nation-wide business.

What is profit? Net profit is the return over and above all expenses. Gross profit is the return over the cost of simply making the goods.

What is cost? Prime cost, which is the material plus the actual labor of making, or it may be the total cost with all the expenses of doing business added.

You might make a gross profit of two hundred per cent. of your prime cost, which might be sixty per cent. of your sales and then you might make twenty per cent. net profit on your sales, or sixty per cent. net profit on your prime cost. But it is possible to come out with no net profit in the end. In other words you must understand that the part of the cost that will determine your profit is what is called the “overhead,” meaning what is termed the operating expenses, something that is up to you and you alone.

To prevent errors you should figure your profit percentage on your selling price, because the sales figures are always handy to get at.

Thus if you find the gross cost of a box of pop-corn to be twenty-five cents and you sell it for fifty cents, your twenty-five cents profit is fifty per cent, of your sales.

A small net profit and turning your money over often will amount up big in the run of a year.

If you make a net profit of twenty per cent. and turn your money over twelve times a year you are making two hundred and forty per cent. upon your working capital.

Returning to your question: “What profit is there in pop-corn?”

Prime Gross Per Cent. Per Cent. Selling Price Cost Profit Sales of Cost Salted Pop-corn 5c per bag 1 cts. 4 cts. 80 400 Buttered Pop-corn 5c per bag 2 “ 3 “ 60 150 Sugared Pop-corn 5c per small bag 1 “ 4 “ 80 400 Pop-corn Brittle 50c per pound 20 “ 30 “ 60 150 Pop-corn Bar 10c each 2 “ 8 “ 80 400 Pop-corn Brick 5c per package 1½ “ 3½ “ 70 233 Pop-corn Crispette 5c per package 1 “ 4 “ 80 400

Your costs will perhaps show some variation from these figures, for it is not to be expected that costs will be the same everywhere.

The costs here given are figured from the formulas in this book using the machinery herein described. They are not the lowest at which the goods can be produced, and of course, you see that they contain no “Overhead” and therefore are gross and not net profit.

No two men running business under identical conditions will have the same prime cost, gross cost, or gross profit, but they may come out with an equal net profit.

The only thing by which you can judge the future is the past. All information and figures in this book are from records compiled from years of experience and practice.

SAVE ON YOUR REPAIR AND POWER BILLS

Every machine has grease cups, oil cups, or oil holes, and the directions with each machine call attention to the particular places, if any, that require particular attention.

Machine makers find ninety per cent. of customers’ troubles are directly traceable to lack of attention of cleaning and oiling. Why is it you expect a machine to oil itself and keep the dirt out of its way? Dry bearings wear fast and once you let them get real dry and start to cut, then oil will not bring them back, and sometimes does not stop the cutting. You know dry bearings require more power to drive them.

Some of you clean your machines but you do not oil them enough. Again you oil them without cleaning them.

One belt dressing I have found and used in my shop that keeps the belts always in condition to pull the load. I use no soap or other emergency so-called belt dressing; no use for it. This belt dressing is put on once in three to six months. That is efficiency, a saving of time and money.

I would like an opportunity to show you real power plant efficient management. I know of one where even the eight elevators automatically indicate in the office on a time clock. Red tape? No, sir. It is a check on the elevator boys and the watchman, and is an automatic record of breakdowns. You see each elevator is in a separate part of the building from the others. That indicator cannot misrepresent.

Write us about your requirements. If we do not have it, we can tell you where to go for it.

INDEX

A

Advertise, 54. Agricultural Department, Bulletins, 6. Arranging Machines, 6, 7, 8, 15, 16. Association, National Confectioners’, 55.

B

Balls, 39. Barrels, 16. Bench, 15. Boiling, 14, 48. Boxes, 45. Breakfast Food, 47, 54. Bricks and Bars, 8, 9, 10, 30, 31, 32, 33, 34, 37. Brittle, Pop-Corn, 49. Brittle Bitts, 39, 40. Bulletins, 6. Butter, 43. Butter Substitutes, 43. Buttered Pop-Corn, 49. Buttered Pop-Corn Tank, 41.

C

Candy Machines, 59. Cans, 46. Cases and Crates, 46. Charts, 8, 9, 10. Chocolate, 45. Cocoanut, 45. Colors, 44. Consumers, 53, 56. Costs, 56. Cover for Kettle, 27. Cream of Tartar, 44. Crispettes, 31, 50. Crispette Machine, 31, 38. Cutting, 34, 35, 36. Cutting Machine, 35, 36, 37, 59. Cutting Pack, 34, 35, 36, 37.

D

Distribution, 53. Dumping Batch, 30.

E

Ear, 6. Expenses, 56.

F

Flavors, 44. Fire, 16, 18. Food Value, 6, 7. Fritters, 31, 38, 50.

G

Gas Fuel, 17. Gasoline Fuel, 17. Grinder, 21, 22, 23, 24. Ground Pop-Corn, 51.

H

Home, Pop-Corn in The, 6. Hopper for Mill, 24.

J

Jobbers, 53, 54.

K

Keeping Quality, 44. Kettle, 11, 12, 13, 14, 26, 30. Knife, 41.

L

Labor, 56. Lubrication, 58.

M

Mail Orders, 53. Measures, 25. Mill Stand, 15. Mixing, 11, 12, 13, 27, 28, 29. Molasses, 44. Motors, Electric, 16, 42.

N

National Confectioners’ Association, 55. Nuts, 45.

O

Oiling, 58. Overhead, 56.

P

Paddle, 41. Panning, 30. Pans, 30, 31, 39. Paper, 45. Peanuts, 18. Penny Goods, 45, 51, 53. Popped Corn, 6, 17. Popping Machine, 15, 16, 19, 46. Popping Machine Stand, 16. Popping of Corn, 6, 7. Potato Slicer, 59. Press, 31, 32, 33, 34. Pressing, 31, 34. Prices, 56, 57. Process, 8, 9, 10, 11. Profit, 56.

Q

Quality, 44.

R

Raisins, 44. Raw Grain, 6, 7, 43. Raw Materials, 43. Recipes and Formulas, 47, 49. Retail, 53. Round Cakes, 31, 38, 50.

S

Salt, 44. Sandwiches, 51. Self Filling Machine, 38. Sifter, 16, 20. Soda, 44. Square Cakes, 8, 9, 30, 37. Stirring Pop-Corn, 11, 12, 13, 27, 28, 29. Stirring Stand, 15, 27. Stock Tanks, 25. Stock Tank Stand, 15, 25. Stove, 25. Sugar, 52. Sugared Pop-Corn, 49. Syrup, Corn, 43. Syrup, Stock, 25, 48.

T

Thermometer, 25, 26. Transfer Racks, 35, 36. Two Way Cutting Machines, 37.

U

Unpopped Kernels, 16, 18, 20, 47.

W

Water, 44. Weight of Raw Corn, 7. Wholesale, 53. Wrapping Machine, 31, 59.

TRANSCRIBER'S NOTES

Some illustrations have been moved closer to relevant text, and some section headings have been moved closer to the top of the relevant section.

The symbol ‡ denotes an illustration description that is not part of the original work.

The following amendments have been made to tables, for legibility on electronic devices:

1. Page 10: the column headings in the table have been replaced by letters and a key provided. 2. Pages 23, 24, 29, 33, 36, 37: the small tables have been transposed from horizontal to vertical layout.

The following further changes have been made to the text as printed:

1. Page 10 (Key, Item E): Paddle No. 1006-1 changed to Paddle No. 2006-1 2. Page 14: 'must be at a high tempreature' changed to ' ... temperature' 3. Page 17: 'neither does if' changed to 'neither does it' 4. Page 23 (table): The 'Throat' measurements have been shown as inches (″) 5. Page 24: 'No. 2016-6, or No. 2006-11' changed to ' ... or No. 2016-11' 6. Page 24: 'Stock No. 109-4 Knitt’s' changed to ' ... Knott’s' 7. Page 24 (table): The 'Pulley' measurements have been shown as inches (″) 8. Page 24: 'Stock No. 2016-1, or No. 2106-2' changed to ' ... or No. 2016-2' 9. Page 26: 'so called “ragging off the paddle”' changed to 'so-called ...' 10. Page 30: 'in making square corn-cakes' changed to '... corn cakes' 11. Page 32: 'made with small cap screws' changed to '... cap-screws' 12. Page 34: 'Twofors' changed to 'Two-fers' (two occurrences in stock list) 13. Page 37: 'Stock No. 2007-2-inch pans' changed to 'Stock No. 2007-2 12-inch pans' 14. Page 40: 'Stock No. 1007-1' and 'Stock No. 1007-3' changed to 'Stock No. 2007-1' and 'Stock No. 2007-3' respectively. 15. Page 43: period inserted after 'with your syrup' 16. Page 45: 'a forty pound manilla wax paper' changed to '... manila ...' in line with 'Grade forty pound manila' on same page 17. Page 45: 'Boxes stronger.' changed to 'Boxes are stronger.' 18. Page 49: comma inserted after 'corn syrup (1¼ quarts)' 19. Page 50 (Recipe A): period changed to comma following 'Put in your kettle ... 1 quart of syrup' 20. Page 51: 'Put in teaspoonful of salt' changed to 'Put in a ...' 21. Page 57: 'your your selling price' changed to 'your selling price'

The following anomalies in the printed text are noted, but no change has been made:

1. Page 7: 'proteid' is an earlier spelling of the word 'protein' 2. Page 49 (Recipe 2): 'glacine' is more commonly spelt 'glassine' (a type of wrapping paper).