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Wisconsin Cheese Makers' Association / Proceedings of the Wisconsin Cheese Makers' Association forty-second annual convention November 15, 16, 1933 assembled in the Eagles Auditorium Sheboygan, Wisconsin

Price, Walter V.
Cost of making cheese at four different cheese factories,   pp. 46-51 PDF (1.3 MB)

Page 50

this choice was not great enough to offset the disadvantage in the
selling price of the product.
Table 4 presents in detail the expenses per pound of cheese which
were incurred by each of the four factories. This table is given to
show how each item may be compared for each plant. Total costs,
which have been discussed, only show the general region of an ail-
ment, if any exists; detailed items such as those shown in this table
permit the accountant to put his finger on the offending expense as
accurately as a skilled surgeon probes for a painful appendix. The
supply account of factory B, for example, needs a major operation ac-
cording to this table. The operator was spending enough money for
supplies to make two pounds of cheese instead of one-and that was
before the prices of bandages and boxes went up, too. And so we
might go through the whole table comparing the individual costs at
each factory, pointing out the weaknesses and the good points of each,
commending the one and looking for the reasons for the faults of the
Table 3 illustrates some interesting comparisons of the efficiency of
the use of capital in the various plants. Such comparisons are help-
ful in considering new investments, or in planning new activities in
the business. Factory A was not in good physical condition. The old
building, badly worn machinery, poor floors, inefficient boiler, all could
have been improved by the investment of more money and would un-
doubtedly have improved the morale of the patrons and operators.
Despite the relatively favorable net income at this plant (see table 2)
patrons were leaving it for neighboring factories during the period
of study. Contrast with this condition that which existed in factory
C. A high investment has produced a very attractive plant. An
aggressive operator has literally bought new patrons with this high
investment in modern machinery, trucking services, and the like. The
factory increased its patronage by more than 1/3 during the course of
the study and has about twice as many patrons today. The miserly
policy of capital investment in factory A which was inspired partly
by fear of competition and partly by local politics is like a brake
which is gradually slowing the progress of this once splendid business.
The investment policy of any factory calls for the exercise of the
highest degree of business judgment. We believe that adequate rec-
ords of successful factories in the state would be a wonderful help in
solving this difficult problem.
And so the comparison of the various items of costs and sales might
go on. It is clear, however, for the purpose of this discussion that
all operators in this study would have been in a better position finan-
cially if they had possessed monthly records to show the trends of
their own operations and to compare them with the operations of
others. Such monthly records compiled from year to year, even in a
single factory, furnish standards which are helpful in planning sea-
son purchases, estimating costs of operations, calculating income tax
returns, detecting excessive expenditures, in addition to the advan-
tage of showing the efficiency of factory operations.

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