One of the chief functions of the comptroller's office is to gather statistics which tell what is being done in every branch, department, and division of the business. The purpose of these statistics is to show the results of these activities—the gross volume of transactions, the cost, and the result in net profits. When assembled in the form of intelligent reports, these statistics present an understandable history of the business.

The statistical department may be considered as the cost department of the commercial branch. Manufacturers recognize the necessity for comprehensive statistics in the manufacturing branch; they realize that they must know what their goods cost to manufacture; but in comparatively few enterprises is the importance of commercial costs recognized.

In the factory, costs are figured down to the most minute detail; what it costs to perform each operation on every part of the completed whole is known; the efficiency of every man—what he costs in wages, in power, and general expense, and the cost of every bit of material he uses—all of this is told by the cost accounting system. What it costs to sell the goods is usually a matter of guess work.

To know what it costs to run a business—to know commercial costs—is just as important as to know manufacturing costs. Both are necessities if the business is to attain its greatest possibilities.

What are the actual profits of this or that department?

How much net profit is there in handling this commodity?

Does it cost more to send a salesman to that little town, ten miles off the main line, to take Jones' order than the profits on his business?

Is there as much profit in working this territory as some other?

Measured by the standard of net profits—not volume of sales—is Brown a profitable salesman? Compared with White, what is his efficiency?

These are some of the questions to be answered before it can be claimed that the statistical department has reached its highest state of efficiency. The success of modern merchandising is measured, not by the volume of business transacted, but by profits. In days gone by, the merchant liked to be able to say that he sold more goods last year than any of his competitors; today he is better pleased if he has made the most money. A net profit of 10% on a business of $500,000.00, is more attractive than a million-dollar business without profit.

Commercial costs may be divided into two classes—sales costs and administrative costs. Of the two, sales costs are the more important; if sales costs are not kept down, there will be nothing left from which to pay administrative costs.

Sales Costs. In the broadest interpretation, sales costs include every expense properly chargeable to the sale of goods. For statistical purposes it may very properly be divided into direct and indirect, or general selling expense. Direct sales expense is made up of salaries and traveling expenses of salesmen—items which can be definitely determined and charged against definite sales. Indirect sales expense is made up of advertising, salaries of the sales manager and his office assistants, expense of entering orders and billing, packing and shipping expense, and all similar items properly chargeable to the expense of marketing the goods—items which, while chargeable to sales, cannot be applied directly to individual sales, nor to specific territories.

Figuring sales costs is a specific function of the statistical department which is sometimes referred to as profit figuring—an appropriate term, since the principal object of gathering sales statistics is to determine profits. As a preliminary to figuring profits, it is necessary to have an accurate record of the cost of the goods sold. In a manufacturing enterprise, it is expected that this information will be supplied by the cost department; in a trading business, the statistical department must make the calculations.

The first step is to obtain a record of all goods received. This can be done most easily by obtaining duplicate invoices, which will be supplied by those from whom goods are purchased, if insisted upon. To the invoice must be added the freight and cartage—items which must be supplied by the accounting department. This gives the total cost, laid down, and should be divided to show costs per unit—as yards, dozen, pounds, barrels, or tons. On a mixed shipment it is not difficult to apportion the freight to the different commodities. Every freight bill shows the rate at which the shipment is billed, and the total can be apportioned by weight on the same basis.

To insure a permanent record of cost prices, it is best to register each shipment received, with its cost. This register should be divided according to commodities, providing a separate record of each one. A loose-leaf book is best for the purpose.

A suitable form is shown in Fig. 1. This sheet is headed with the name of the article or commodity, and each sheet is used for a record of receipts of a single article. The record includes date of invoice, date received, from whom, lot number, quantity, price, amount of invoice, freight and cartage, total cost, and cost per unit. Each lot of goods received is given a lot number, these numbers being consecutive for each commodity.

The sheet serves the double purpose of a record of receipts and a price list. Both the quantity and total columns are footed, the footings being carried forward to the end of the month. All sheets are filed alphabetically by commodities, subdivided by departments, the current sheets always being on top.

Records of Shipments. Before sales costs and profits can be figured, the statistical department must be supplied with records of shipments. This may be accomplished by providing an extra copy of the invoice, which is easily done with modern billing systems. To save transcribing, the copy for the statistical department should be wider than the original invoice. The extra width allows for the addition of special columns needed in figuring profits on the shipment, as shown in Fig. 2. This form has added columns for total cost, gross profits, sales expense, net profits, and per cent of net profits.

When these invoice copies are received in the statistical department, the price lists, Fig. 1, are referred to for cost prices. Here the use of the lot number assumes importance, as prices are obtained for the specific lot numbers shown on the invoice, resulting in actual rather than estimated profit figures.

After serving their purposes in the tabulation of other data, explained later, the invoice copies are filed alphabetically, keeping all invoices to the same customer together. Either a vertical file or a post binder may be used for this purpose.

Returned Goods. Another very important record in profit figuring is that of returned goods. Profits may be figured on the invoices, but if accurate profits on the business of a customer or a salesman are to be recorded, returned goods must be considered.

When goods are returned, it means a loss of anticipated profits, and should be considered in the same light as an actual loss. In a well-managed business, returned goods are kept down to a minimum; if they increase above normal, an investigation into causes is in order. Repeated returns of the same merchandise indicate a defect in the merchandise itself; if those from the territory of one salesman are frequent, an inquiry into the salesman's methods is necessary—he may have the fault of loading his customers too heavily, or of adding to their orders—all of which are added reasons why a record of returns should be kept.

A blank for a monthly record is shown in Fig. 3. This record shows the name of the department from which the goods were sold, the commodity, name of customer, price at which sold, the cost—including selling cost—the loss, and the name of the salesman. From this sheet, all data necessary for complete records can be tabulated.

Salesmen's Records. One of the special benefits—perhaps the chief benefit—of a profit-figuring department is a record of the work of each salesman. Not merely the volume of his sales, but the profits on those sales, measure his worth to the house.

The salesman whose sales are largest in quantity, or even in dollars and cents, is not necessarily the best salesman. One man may sell a thousand dollars' worth of sugar, while another sells two hundred dollars' worth of tea and makes more money for the house; one strives for volume—making price concessions to secure a big order—while the other is content with smaller sales at a good profit.

In the final analysis, profits determine the efficiency of the salesman. His salary may be large or small; his expense high or low; but he is not efficient unless his business shows a net profit.

To tabulate the sales of each salesman, so that a complete record of his work may be seen at a glance, is then, of the utmost importance. The first step should be to make a record of what he sells—how much calico and how much silk. On a loose-leaf sheet, ruled as shown in Fig. 4, a record of a salesman's sales of a single commodity may be kept; from these sheets, a record of his total sales can be tabulated.

The head of this sheet shows the name of the commodity, the name of the salesman, and the month covered by the record. A detailed record is kept of each day's sales, showing quantity, cost, sales, gross profits, and per cent of gross profit. At the end of the month returns are deducted—the information being obtained from the returned goods report, Fig. 3, leaving the net record. This sheet, which is loose-leaf, is filed alphabetically by salesman's name, the sheets for each man being in alphabetical order by commodities.

A record of the salesman's total business is made on the loose-leaf form shown in Fig. 5. This record is made up from the totals of the commodity records, Fig. 4, and the form has the same columns, with an additional column, headed % of total. In this column is entered the per cent which the total sales of each commodity bears to the salesman's total sales. The profits on the salesman's business usually increase in direct ratio to the increase in the per cent of sales of the higher-priced specialties.

This total record is, of course, made up at the end of the month, only the monthly totals being shown. A recapitulation is made at the bottom of the sheet. In the right-hand, or credit, column the gross profit is brought down; in the left-hand column, sales expense is entered, the several items being separated. First, the salary of the salesman and the amount of his traveling expenses are entered and footed, the total being the direct sales expense. Following this is entered the general sales expense that should be charged against the business of the salesman, this item being supplied by the accounting department. The total sales expense is then extended in the credit column and deducted from gross profits, leaving net profits—the real measure of the salesman's value.

These sheets should be filed in the same binder with the salesman's commodity sales records. A separate index may be used, or they may be filed on top of the commodity sheets, bringing the entire month's record together. To make identification easy, they should be of a different color from the commodity sheets.

Sales records such as these give a complete history of the business of each salesman; they tell the whole story in language most easily understood by the manager. The longer they are kept, the more valuable the history becomes.

Mail Orders. In a business in which occasional mail orders are received, sales of this character may be grouped under some such caption as home office, and treated in the statistical records in the same manner as the sales of one salesman. Where an extensive mail-order department is maintained, it may be advisable to keep records of the business of each mail-order salesman.

Expense Distribution. General sales expense must be distributed, on some equitable basis, over the total sales. There are two logical factors on which this distribution may be made, total sales and cost of goods sold. The latter seems to be the most equitable. If based on total sales, the distribution may actually penalize the salesman who is really the most profitable. For example, one salesman may sell for $2000.00 goods which cost $1500.00, while another will obtain $2200.00 for the same goods; if the expense is distributed on the basis of total sales, a larger amount is charged against the business of the latter salesman when the increase is all profit. On the basis of cost, the same amount would be charged against the business of both salesmen.

When the total sales expense and total cost of goods sold is ascertained, the former is divided by the latter amount to obtain the correct percentage. This is then added to the cost of sales of each salesman.

While, as a rule, general sales expense should be charged against the cost of all goods sold, there are certain exceptions when a part of this expense should be charged against specific sales. For example, a manufacturer may make a special appropriation for advertising his product in a certain state, using local papers, street cars, and bill boards. In that case the advertising is very properly chargeable against the business from that state; though it might be advisable to distribute the amount over several months.

A mail-order department involves certain expenses, none of which are chargeable against the business produced by the salesmen. Included in this special expense are such items as postage, stationery, printing, and stenographers' salaries. This expense should be charged against the business of the department and, if records of the work of each salesman are kept, it must be prorated on the basis of cost of goods sold by each.

Total Commodity Sales. A record of the total sales of each commodity is necessary in order that the profit in handling the commodity may be determined. Sometimes it is found that a commodity which is apparently being sold at a profit is actually sold at a loss, when the actual selling costs are determined. Or, one salesman may sell the commodity at a loss, while others sell it at a profit.

The form shown in Fig. 6 is used for a summary of the sales of one commodity. At the end of the month one of these sheets is headed with the name of each commodity and the totals entered from the salesman's commodity records, Fig. 4. Opposite the name of each salesman is entered the quantity and amount of his sales, following which is an important column headed % of whole. In this column is entered the percentage which the sales of the one salesman bear to the total sales of the commodity. If Bacon sells 40% of all the tea sold by the house, it is shown by this report; if he sells 50% of the sugar, it is shown just as plainly. Not only how much of a given commodity is sold, but who sold it, is recorded on this monthly summary.

In the columns following total sales, the total cost and gross profits are entered. From the gross profit is deducted the sales expense—this being calculated on the percentage shown for total sales expense in the recap at the bottom of the salesman's sheet, Fig. 5, leaving the net profit. In the last column, the per cent of net profit is entered. The footing at the bottom of the sheet shows total amounts and the percentages of sales expense, and net profits are calculated on the basis of these totals; this gives the average expense and profit on the total volume of sales.

Department Sales. Next in importance to a knowledge of profits on a single commodity is a knowledge of the results produced by a department. This necessitates a record of departmental sales. Sales and profits measure the efficiency of a department, just as they do of a salesman.

The necessity for departmental records depends on the business. A manufacturer who produces but two or three articles needs only records of sales of commodities; a wholesaler requires records of sales of classes of goods. In a wholesale business, departmental divisions are distinct; each department is in charge of a head, and the record of the department is his record.

In a comparison of departmental profits, the percentage of net profits should not be followed blindly. Certain departments are not money makers. To a certain extent it is possible to discontinue unprofitable lines, or even departments, but in some businesses it is necessary to maintain departments which are not profitable. In the dry goods business—either wholesale or retail—the margin of gross profit in notions is so small that it is doubtful if, when all legitimate expense is deducted, a net profit is realized. The salesman for a wholesale house whose sales of notions is largest, has made the poorest record; the manager who has kept the sales of the notion department at the lowest price—at the same time keeping his stock down—may be the most efficient.

For a record of departmental sales the form shown in Fig. 7 may be used. The data for this report is secured from the commodity records, Fig. 6. For each commodity, the quantity and total amount of sales are entered. Following this is a per cent column in which is entered the ratio which the sale of each commodity bears to the total sales of the department. The columns which follow are the same as on the commodity sales records. A loose-leaf form should be used, and this may be filed with the commodity records—the departmental record on top, with the commodity records arranged alphabetically underneath.

The forms described provide detailed records of the business of each salesman and each department (classified by commodities), records of goods received, and of returned goods. From these records, complete trading statements can be made for each department, or for the entire business.

Trading Statements. Reports in the form of trading statements made from these records give the manager the facts in which he is specially interested; they show him the profits of the business and the sources of the profits.

A monthly trading statement should be made for each department, in order that the total operations may be seen at a glance. All of the essential facts are shown on the department report, Fig. 7, but a properly constructed trading statement affords an opportunity for valuable comparisons. While the fact that a department has made a net profit of $7864.20 this month is interesting, these figures take on added interest when compared with last month's profits.

A form for a monthly departmental trading summary is shown in Fig. 8. In this form, the trading statement for the current month is entered in the two columns headed trading. First, the total amount of sales is entered in the credit column; then the value of stock on hand at the beginning of the month is entered on the next line, in the debit column. When the profit-figuring department is organized, it is necessary to have an accurate inventory in each department that this trading statement may be started correctly. If started on a correct basis, the record becomes perpetual. To the amount on hand is added the value of goods received, as shown by the merchandise received reports, Fig. 1. From the total, the value of the inventory at the end of the month is deducted, the remainder being known as the turnover—the cost or inventory value of goods sold. To find the value of the inventory an actual count of the goods on hand is unnecessary. The value may be found by deducting from the total the value, at cost, of goods sold, which is the footing of the total cost column, Fig. 7. This inventory is, of course, the amount shown as on hand at the beginning of the next month.

The difference between the turnover and sales is the gross profit—being the amount necessary to balance the debit and credit columns. The gross profit is brought down and entered in the credit column. Sales expense is entered in the debit column, the difference between this amount and gross profits being net trading profit, for the current month.

The three columns at the right are for comparative figures. In the column headed to date is entered the total sales, turnover, gross profits, expense, and net profits from the beginning of the current fiscal year to date; in the two columns next following, the same facts are entered for last month and last year.

As a rule, these monthly trading statements for each department give the manager just the information he wants; but, when there are a large number of departments, it is sometimes advisable to tabulate these statements, giving one complete record. A form for such a report is shown in Fig. 9. No detailed explanation of this report is necessary, the columns being arranged for the same information as given on the department statement. The only exception is the inventory column, which is intended for the current inventory only. In the three comparative columns at the right, net profits only are entered. This statement gives a history of sales in a nut shell.

Customers' Profit Records. To know the value of each customer, as measured by the profits on his business, is as important as a knowledge of the value of each salesman. It is for the purpose of obtaining this information that columns for calculating net profits are added to the statistical department's copy of the invoice, Fig. 2.

Detailed records of purchases of each customer, divided by commodities, are unnecessary, but there should be a summary showing total purchases and profits. Detailed information about individual shipments and separate commodities can be obtained from the invoice copies.

Fig. 10 shows a form for a customer's record on a 4-in. X 6-in. card. This form provides for monthly records only. At the end of the month the total purchases and total profits are obtained from the invoice copies, and the amounts entered on the card. The card is ruled for a two-years' record.

These cards should be filed geographically, the name of the town heading the card. If there are several customers in a town, their cards should be arranged in alphabetical order. State boundaries need not be followed; it is usually better to file the cards according to salesmen's territories. This makes a combined customers' and territorial file, and if a record of the business in a town or state is wanted, it can be obtained from the cards. If desired, a new card can be inserted for a total record of each town or group of towns.

Value of Profit Figuring. The value of the records described can scarcely be overestimated. To know the profit-making ability of each department and each salesman; to read at a glance the value of every town and every customer; to know the cost value of goods sold and the exact condition of the stock at the end of every month, these are the facts which enable a manager to size up his business.

The man who lacks these facts—who is obliged to wait for them until the end of the year, and then get only a part of them, does not have a grasp of his business, and cannot expect to bring it to the highest possible state of efficiency. That more managers have not insisted on having these facts before them is doubtless due to one or both of two causes: failure to appreciate their value; and the belief that dependable statistics of this sort were unobtainable without too great an expenditure of labor. Neither is borne out; all the evidence is to the contrary.

As to their value, little need be said. The fact that the most extensive enterprises find it profitable to compile statistics setting forth the most minute operations in every department is sufficient evidence of the value of corresponding statistics to the smaller merchant or manufacturer. If a great railway system finds it not only profitable but necessary to compile statistics showing the cost of repairs per ton-mile for every engine in its service, arranged for a comparison of the efficiency of individual locomotives, surely the merchant will find it profitable to analyze his profits. An analysis of the profits and losses of a wholesale grocer, showing how much he has made on tea; how much he has lost on sugar; what profit has been produced by a certain salesman; the profit value of a customer, is of as great value to him as a knowledge of the cost of repairs on an individual car to the officials of a railway.

To the man who has made no attempt to secure them, the compilation of these statistics may seem an endless task, not justified by their value. Actually, the magnitude of the task is, to a great extent, governed by desire; a man is quite likely to obtain what he really wants, and as his desires increase the difficulties decrease.

When it comes to the actual work of preparing these statistics, the difficulties are found to be really minor ones. The main thing is to do the work every day; to record the transactions of a single day does not involve an undue amount of labor, but if allowed to get behind, the task assumes appalling proportions.

Modern billing systems make it possible to tabulate certain of these statistics when the bills are made. The adding machine is also of inestimable value in statistical work; computations which would involve a whole day of hand-and-brain work are made in an hour on a modern adding or calculating machine.

In deciding what statistics should be compiled, the nature and needs of the business must be considered. It is usually unnecessary to use as the unit a single brand of a given commodity. A wholesale grocer, for instance, would not find it necessary to make separate records of each brand, or even each article, in canned goods. They would be divided into classes—as vegetables, fruits, and meats, and each class would be treated in the records as a single commodity. When taking on an entirely new line, he might wish to compile separate statistics for a time, but when the fact that the line is a profitable one has been established, the special statistics would be unnecessary.

Again, one house will find it advisable to go into certain details not considered necessary in another establishment. For example, one house has, as a result of the facts revealed by their statistical department, established a system of bonuses to their salesmen based on the profit percentages of their business. This necessitates a record different from any of those that have been shown. This concern has grouped the goods in each department according to percentages of gross profits—as 5%, 10%, 20%, 25%, etc. Each salesman is given a monthly quota—based on salary, territory, and previous sales—which he is expected to reach. This quota specifies not only the amount of sales but the percentage of profit; each $100.00 of sales is expected to include not more than a certain amount of 5% goods, nor less than a given amount of 25% goods, the exact ratio of each being given. If a salesman exactly equals his quota, maintaining the percentage prescribed, he is given a small bonus; if he exceeds his quota and maintains the prescribed percentages, or increases the percentage of sales of the more profitable goods, his bonus is increased in proportion to the increased profits—the greater the percentage of profits, the more rapid the increase in the bonus. On the other hand, if his sales of goods sold at a small profit increase, he is penalized by being denied a bonus, no matter what the volume of his sales.

This bonus system, which is an adaptation of the bonus wage system used in factories, has the effect of increasing the sale of the most profitable goods. When a customer places an order for goods in which there is little profit, the salesman—who cannot refuse the order—is given an incentive to push the sale of more profitable goods; he must do so as a matter of self-protection.

To determine the bonuses, statistical statements differing from those already shown are necessary. These statements must divide sales according to percentage groups, rather than by commodities, as shown in Fig. 11. The data for this statement is taken from the commodity sales statement, Fig. 4, and with an adding machine can be tabulated very quickly.

Another house, which does an exclusive mail-order business, keeps accurate records of the sales resulting from circular letters, charging the cost of the letters, including postage, to those sales. Records are also kept of the sales of each correspondent. When an order is received, the correspondence record is examined and, if the order is in response to a dictated letter, the correspondent receives credit. Each correspondent is required to keep a record of the number of dictated and form letters that he uses, the cost of which is charged against his sales. At the end of the month results are tabulated showing the percentage of orders secured from circular letters and from dictated letters; the amount of business from each letter of each correspondent; and the percentage of cost to the cost of goods sold.

These and many other statistics can be tabulated, and for each a special form is needed. The classes of information to be presented in statistical form depend on the business. When it has been determined what information will be of greatest value, forms should be prepared which will make it possible to tabulate the desired facts with the least labor.

ADMINISTRATIVE COSTS

Commercial costs which are not chargeable to sales are classed as administrative, and may be divided into executive, accounting, office expense, credits, and collections.

In a strictly trading business, purchasing is an added division, while in a manufacturing enterprise it is usual to consider this a manufacturing expense.

Executive expense is made up of the salaries of the general manager and comptroller, salaries of clerks and stenographers, and a proper portion of miscellaneous expense. In a manufacturing business, a part of the executive salaries is charged to manufacturing.

Accounting expense includes the salaries of chief accountant and cashier, clerks and stenographers, blank books and supplies, and miscellaneous expense.

Office expense is charged with the salary of the chief stenographer, and the expense of mailing and filing, including salaries of clerks.

Credits and collection expense include the salaries of the credit man and his clerks, the cost of mercantile agency service and reports, and the cost of collections, including postage.

Purchasing expense, which, as stated, sometimes is a commercial expense, includes the salaries of purchasing agent, receiving clerk, stores clerk and their assistants, and the entire expense of the storeroom.

In a strictly trading business, such items as power, heat and light, insurance and taxes—usually a manufacturing expense—become administrative expense. These, and all similar items, are grouped under the head of miscellaneous, to be distributed over all divisions of commercial costs.

In the main, the different divisions of administrative costs are easily assembled. In each division there is the salary of the department head, the total of which is charged to the division, and a correct apportionment of salaries which must be divided among two or more divisions. For illustration, the salaries of stenographers are distributed as has already been explained. By far the larger part of this expense is charged to the advertising and sales departments, but from the weekly reports of this division, the amount to be charged to the executive, accounting, credit and collection, and purchasing divisions may be obtained.

Mailing Costs. In the division of office expense one item which must be distributed, at least between sales and administrative, is mailing expense. Mailing expense is made up of labor and postage, the latter being most important.

All enterprises of magnitude maintain a separate mailing department in charge of one person, frequently the chief stenographer. The very fact that postage is the big item of expense in the mailing room, makes a very complete system of records absolutely essential.

The work of the mailing room consists of folding circulars and letters, enclosing catalogs, circulars, and letters in envelopes, addressing, filling in dates and addresses on printed form letters, and stamping. Sometimes addressing and filling in is done in the stenography division, but the more usual plan is to consider this a part of the mailing expense.

Of first importance is a record of work done, which is best secured by means of a daily report of the work of each clerk. All work should be assigned by the head of the department, and the clerk required to keep an accurate record of both time and production. This question of assigning the work is especially important in the mailing room, as one department may flood the room with work which, if done, would make it impossible to handle the work of other departments for several days. The head of the department must decide which is the most important work. Sometimes it is necessary to make out, in advance, a weekly schedule of circularizing to be done, and compel all departments to be governed by the schedule. As an alternative, some of the larger enterprises maintain a separate mailing room, in charge of the advertising department, exclusively for circularizing work.

A suitable form for the employe's daily report is shown in Fig. 12. This report is divided for a record of the different classes of work performed. All work is recorded by number, that is, if the work is folding circular No. 518, that number is placed in the first column opposite folding. The center column is for the name of the department; as a rule, the form number indicates the name of the department, but sometimes the same form is used by several departments. In the columns next following, the clerk enters the number of pieces handled and the time taken. The extension columns, showing rate and amount, are filled in by the head of the department.

From these reports, the pay-roll is made up. All of this work can be handled on a piece-rate basis, and most large concerns find this the most economical basis. The rate must necessarily be varied to suit local conditions, and should be high enough that by doing a full day's work a clerk will earn something more than the standard day wage. For example, a girl will address from 1000 to 1500 envelopes, or fill in addresses on the same number of form letters, in a day of eight hours, the average being—say 1200. In different cities the accepted wage standard for the class of help required in this work varies from $5.00 to $7.00 a week. Where the $5.00 rate prevails, a piece rate of 90 cents a thousand is equitable; a girl who maintains an average of 1200 a day for five and one-half days (the usual time required in an office) will earn $5.94 with a chance to earn still more if she can increase her speed. The extra ninety-four cents is an inducement to at least equal the average; without it, she would probably drop to 1000 or less. While her wage has been increased, the cost has been lowered.

Daily Mail Report. That the information may be in convenient form for statistical purposes and for making final reports, there should be a daily mail report. This report should be a complete record of everything mailed, showing the number of pieces and the rate of postage for each. A form for such a report is shown in Fig. 13. This report is divided for a record of regular mail-letters, circulars, and catalogs—and merchandise. The latter is not required in all cases, but is very important for a concern doing a mail-order business in small articles which can be sent by mail.

This report shows the description, number of pieces, and postage rate. In the description column the name of the department should be written first, followed by a description of the mail originating in that department. The daily report should be made up by the stamp clerk, without reference to the individual employes' reports, as it is intended as a check against the latter. A memorandum of the number of pieces reported for the different operations by the employes should be kept, and at the end of the week compared with the quantities shown by the daily mail reports. For some of the operations, the quantities reported by employes may be the larger, certain work being completed on matter which has not been mailed. To reconcile this difference, the work itself should be on hand in the mailing room.

Postage Record. The most important of all records in the mailing room is the postage record. Postage should be placed in charge of the stamp clerk, who should be made responsible for its accounting. The mail clerk is, in fact, a cashier, having the custody of the equivalent of cash in the form of postage stamps. Unless a very strict record is kept, there are abundant opportunities for thievery of stamps and, because they are almost as easily disposed of as cash, the temptation is strong. So great have the losses been from this source, that the government now permits business houses to identify its own stamps by means of perforations. There is now on the market a machine which perforates the initials or trade mark of a firm. The machine is very rapid in operation and stamps can be perforated in sheets very quickly. An enlarged reproduction of a stamp perforation is shown in Fig. 14.

The first step in providing for a complete postage record is to make a voucher for postage required. The cashier should require a voucher before supplying stamps or the money with which to buy them. A special voucher form showing the postage on hand, and the number of stamps of each denomination required, is shown in Fig. 15. This should be made in duplicate; the original goes to the cashier and the duplicate is retained by the stamp clerk.

Weekly Report. From the daily mail reports, a weekly postage report should be made. This report should show the total amount of postage used, distributed by departments. A form for such a report is shown in Fig. 16. In the first column the names of the departments are written, and in the daily columns the amounts used are recorded. The amount expended for registry and special delivery is entered at the bottom of the sheet, and below this is a recapitulation showing the balance of postage on hand. This report, which is made by the head of the mailing room, should be in duplicate—one copy for the accounting department, and one to be retained by the stamp clerk.

Weekly Mailing Report. The final report of the mailing room is a weekly report which shows exactly what work has been done for each department. The information required to make up this report is obtained from the employes' daily reports, and the daily mail reports. The postage is taken from the daily mail reports and checked with the weekly postage report to guard against any inaccuracy. A comprehensive form of report is shown in Fig. 17. This report is made to the statistical department.

Stationery and Supplies. Attention has already been called to the necessity for the proper care of stationery and office supplies. The losses due to careless handling of supplies are more serious than is usually appreciated. Probably the best way to reduce this expense is to require signed requisitions for all supplies drawn, and to charge all supplies to the different departments. All departments should be required to present requisitions once a day only, and then only during certain hours. In very few offices is a stock clerk required for office supplies alone; if the supplies are kept in the regular storeroom, or if one of the office clerks has charge of the supply cabinet, this plan will save time, as an hour a day is sufficient to handle the work in almost any office.

After posting the supplies records, the clerk in charge should make a report to the statistical department of supplies drawn. This may be a weekly report, as shown in Fig. 18. A second copy should be made for the accounting department.

This report shows the value of supplies drawn each day by each department. The amounts can be entered daily from the requisitions, the totals being entered at the end of the week.

Summary of Administrative Expense. The reports and records described place the statistical department in a position to make complete summaries of administrative expense. The salaries of department and division heads, clerks, and stenographers employed in each department are obtained from the accounting department; mailing expense is obtained from the weekly report of the mailing clerk; cost of supplies drawn is shown by the supplies clerk's report; the amount of expense items not otherwise accounted for is supplied by the accounting department. The last item named—representing overhead expense—can be distributed to the departments on the basis of the ratio of the known expense of each department—that is, if the known expense, including salaries, mailing, and supplies, in one department is 20% of the known expense of all departments, it may be charged with 20% of the overhead.

Fig. 19 shows a form for a summary of all administrative expense, the different classes of expense being divided for each department. Totals of expense of each class, totals for each department, and the grand total are shown. Totals of the different classes and the grand total must agree with the records of the accounting department. At the bottom of the administrative expense summary the per cent of total administrative expense to sales and turnover—or cost of goods sold—should be shown.

Profit and Loss Statements. The profits shown by the comparative trading statement, Fig. 9, are trading profits only—not net profits, as administrative expense and profits from other sources than sales are not included. A statement should be prepared, therefore, which will show net profits. This can be combined with the trading statement, but the better plan is to prepare a separate statement. It is usually advisable to supply copies of the trading statement to the heads of all departments of the sales division that each may see what progress he is making, and compare it with that of other departments. It is not advisable, however, to let the department heads know the exact net profits; this information is for the general manager and directors.

Fig. 20 shows a form of monthly profit and loss statement, divided by departments. The totals for the fiscal year to the first of the current month are brought forward at the head of the sheet; then the figures for the current month are entered. Sales, sales expense, and sales profits are taken from the trading statement; administrative expense is shown by the summary, Fig. 19. Administrative expense is charged to the different departments on the basis of the turnover—that is, if the total administrative expense is 10% of the total turnover, each department will be charged an amount equal to 10% of its turnover.

There are certain profits which arise from other sources than the sale of goods in which the concern is trading. Among other sources are interest and premiums and profits on the sale of bonds and stocks. All such items should be listed separately each month that the amount of unusual profits may be known. This statement presents a history of the progress of the business reduced to its final analysis—that of actual net profits.

MAILING-ROOM MACHINERY

Mechanical devices and machines are used for many purposes in an office, and both the variety of uses and types of machines are steadily increasing. Inventors and manufacturers of office appliances are working constantly to perfect devices which will save time, insure accuracy, and reduce costs. Among the important devices are several designed to reduce labor and insure increased speed in the mailing room.

Addressing Machines. One of the most efficient labor-saving devices is the addressing machine, which is used for addressing envelopes, cards, and other matter, to a large list of names. These machines are especially well adapted for the names to which communications are addressed at regular intervals. Brokers and commission men use them for addressing daily market letters to permanent lists of correspondents; business houses in all lines find them convenient for monthly statements, using the machine both for addressing the envelopes and filling in the names on the statements. An office boy can fill in addresses on statements for all accounts in the sales ledger, and address the envelopes, saving about one-half the time of the bookkeeper.

In the advertising and sales department, the addressing machine is used to excellent advantage for addressing follow-up letters, booklets, circulars, and catalogs. Its use makes it easy to send advertising literature to all customers at frequent intervals. The machine is not recommended for a prospective customer's follow-up list, unless a large number of follow-ups are to be sent; but when a man becomes a customer, it may be safely assumed that the name is permanent.

Of the machines now on the market, one of the best known is the addressograph. This machine is made with both card addresses and chain addresses. The card machine, which is shown in Fig. 21, is the most practical for the uses to which the machine is put in the average office. With this machine, metal frames the size of an index card are used. These frames are made in two styles, one of which has a metal printing plate, while with the other, the name and address are set in rubber type. With the first style, the printing plate is made by stamping the letters on a sheet of metal. This makes a permanent address, which cannot be changed without making a new plate.

Fig. 22 shows the rubber type frame. The name and address are set up in the type frame, and can be changed at will. Type taken from old addresses can be used over and over again. When an address is set, a proof is printed on a card, which is placed in the upper half of the frame. This card is large enough for notations, and can be arranged for recording any information desired.

The metal frames are provided with tabs printed with letters, names of towns, numbers, or other special information, and are filed in card drawers, as shown in Fig. 23. They may be filed in any of the usual ways adapted for card systems; a customers' list may be filed according to states and towns, and the names in a certain town addressed without disturbing the balance of the list.

To operate the machine, the address plates are first transferred to the magazine on top of the machine. The contents of a drawer can be transferred without handling. The plates are automatically fed to the printing point of the machine, from which they are returned to the drawer, which is placed under the machine, in the exact order in which they were filed. When the address frame reaches the printing point, the address is plainly visible on the card, so that any name can be skipped.

With an addressograph it is claimed that 3000 addresses an hour can easily be made. This takes the place of several girls, and reduces the cost to a minimum.

Folding Machines. One of the most practical labor-saving devices for the mailing room is the folding machine. Direct advertising, by means of circular or form letters, and printed circulars, is becoming more and more popular. Where such communications were formerly mailed in hundreds, they are now mailed in thousands; it is not uncommon for a concern using this form of advertising to mail a million circulars or letters on one proposition in a single season.

To fold these letters and circulars in the ordinary way is an expensive task. Not only is the labor cost involved, but the question of space, which in many offices is of even greater importance. While a plant occupying buildings owned by the company may be in a position to provide plenty of space for offices, the great majority of businesses are conducted in cramped office quarters; the modern office building with its high rents tends to reduce office space to a minimum. As a result, many a business, lacking room in which to work a large force of folders, has been obliged to hire its extensive circularizing done outside of the office.

These difficulties have to a great extent been overcome by the folding machine. For many years printers have made use of machines for folding, but it was not until a comparatively recent date that a machine adapted to office use was perfected. Now there are several practical machines on the market.

One of these machines will fold from 4000 to 7000 letters or circulars an hour, depending on the size and weight of the paper, and the number of folds. This is equal to eight persons folding by hand, and the machine and operator occupy no more space than one hand folder.

The best machines are so made that they can be operated by hand or electric power. Wherever electric lights are available, the power machine can be used. Including the cost of power, the maximum cost of folding with one of the machines is from 3 cents to 5 cents a thousand. One of the well-known types, with motor attached, is shown in Fig. 24.

Mailing Machines. To a concern mailing large quantities of circular matter, an envelope sealer or mailing machine is indispensable. Envelope sealers which worked in a more or less satisfactory manner have been on the market for several years. These machines have been improved, and their best features combined with new ideas, until now machines are to be had which work perfectly.

Several of the machines seal envelopes only; one both seals the envelopes and attaches the stamp. The combination sealing and stamping machine seals, stamps, and counts envelopes at an average rate of 8000 an hour, doing the work of from eight to ten clerks.

When sealed by the machine, the flaps of the envelopes are folded tightly and securely sealed. The moistening device is so constructed that the amount of moisture passing under each flap is regulated to a nicety, preventing envelopes sticking together on account of too much water being applied. Coincident with the sealing of an envelope, the stamp is applied. Every envelope passing through the machine is stamped; as a result, none are returned from the postoffice for lack of postage.

A special counting device automatically counts the stamps as applied, the counter being in full view of the operator. This means an absolute check on the postage account. The stamps are locked in a glass case and, by moving a lever, the stamp mechanism can be thrown out of operation. It can only be made to apply stamps again by unlocking the case, which places the stamps absolutely under the control of one person.

After being sealed and counted, the envelopes pass to a stacker, all facing one way so that they can be tied in bundles for sending to the postoffice. This is a point worthy of consideration where dispatch in getting mail out is of importance. Envelopes of any size up to twelve inches are handled, and by throwing off the sealing device, mailing cards can be stamped.

The machine referred to is shown in Fig. 25. In operation, the mail is gathered and placed on the rack shown at the top of the machine, with the flap of each envelope overlapping the one next to it. The operator, taking a bunch of about twenty-five envelopes from the rack, holds them lightly against the feed rolls at the left of the machine. The automatic feed separates the envelopes, permitting only one at a time to pass its flap over a metal disc which revolves in water. As the envelope is advanced, the stamps are fed forward, cut off, moistened, and rolled upon the passing envelope. The stamps used in the machine are put up in continuous-ribbon form, wound on a reel, there being 3000 stamps on a reel. Until the government supplies stamps in this form, they are being supplied by the manufacturers, who have arranged with the government to make them to their order.

Letter-Printing Machines. The present extensive use of circular or form letters is made possible by the use of letter-printing machines. To write all of the letters on a typewriter is out of the question, owing to the cost. Consequently, concerns doing any considerable circularizing have resorted to imitation typewritten letters.

For many purposes letters bring better results than printed circulars, but without the personal touch—unless the recipient is made to feel that the letter was written to him—a letter loses its force. This fact makes the ordinary printed letter ineffective. An imitation typewritten letter makes the personal appeal possible; if it is printed from typewriter type in a color that matches the ribbon of the machine, the name and address can we filled in, and it will look like a typewritten letter.

Many printers have learned to produce satisfactory letters of this character and, within the last few years, several printing machines, designed for office use, have been put on the market. These machines are adaptations of the printing-press idea. Letters are set up as they would be for a printing press, typewriter type being used; but instead of printing from ink applied directly to the type, the letters are printed through a large typewriter ribbon. Ribbons of the same kind are used on the typewriter for filling in names and addresses, which insures a perfect match. One of these machines will print from 1000 to 2500 letters an hour.

There are two distinct types of machines, the cylinder machine and the flat-bed machine. A well-known machine of the cylinder type is shown in Fig. 26. The machine has two cylinders, one for type storage and one for printing. The type is held in slots in which it moves freely. To set up a letter on the printing cylinder, the storage cylinder is revolved until the pointer at the top of the machine reaches the desired letter, when a slight pressure of the finger on the small lever in the center moves the type into the slot on the printing cylinder. This is continued until the line is set, when the printing cylinder is moved into position for the next line. To distribute the type to the storage cylinder, this operation is reversed.

After the letter is set, a ribbon is drawn around the printing cylinder, and the machine is ready to print. The paper is fed, printing side up, underneath the cylinder. A turn of the crank draws the paper through, prints it, and discharges it at the back of the machine. Special power attachments can be put on which operate both the machine itself and an automatic feed, which greatly increases the speed.

Machines of the flat-bed type are shown in Figs. 27 and 28. With these machines the type is kept in cases, the compartments of which are arranged in the same order as the keys on a typewriter. The type is set up and locked in a chase, just as it is by a printer, and the chase placed on the flat bed of the machine.

The ribbon is stretched tightly over the type, the printing being done by moving an impression roller over the ribbon. Paper is fed, one sheet at a time, against the paper guide, and the roller, passing over, produces the desired printing impression. When the roller is returned, the sheet is automatically ejected and counted. The pressure and shade of the printing are regulated by the adjustment of impression screws.

An advantage claimed for this type of machine is that electrotypes and zinc etchings can be used, or regular printers' job type can be substituted for printing small circulars and office forms. If a letter or form is used frequently, it can be electrotyped and held permanently, releasing the type.

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REVIEW QUESTIONS.

PRACTICAL TEST QUESTIONS.

In the foregoing sections of this Cyclopedia numerous illustrative examples are worked out in detail in order to show the application of the various methods and principles. Accompanying these are examples for practice which will aid the reader in fixing the principles in mind.

In the following pages are given a large number of test questions and problems which afford a valuable means of testing the reader's knowledge of the subjects treated. They will be found excellent practice for those preparing for Civil Service Examinations. In some cases numerical answers are given as a further aid in this work.