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)
50 WISCONSIN CHEESE MAKERS' ASSOCIATION 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 other. 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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