most sprinkler companies advise that sprinkler heads be sent to the factory for testing, as the fusible solder is is likely to deteriorate through corrosion. Present day standards of sprinkler spacing are higher than when the industry was younger, and so it is urged that advice be obtained in this regard.

In maintaining water supplies, high pressure should be especially sought, although, of course, a sufficient volume of water is absolutely necessary. To have equipment in the best possible shape, a pressure of fifteen pounds should be maintained in the top line of sprinklers.

are

Under the head of obstruction to distribution, plant managers warned not to pile material too close to sprinkler lines, or to build shelves, bins, etc., which would interfere with the distribution from any sprinkler head.

All cases of faulty building construction, verticle openings and other unavoidable extra risks should be referred to sprinkler engineers from the factory where the sprinkler system is made.

Plant managers are usually able to tell where there is the greatest likelihood of explosion in the plant, and consequently such danger may be minimized by heavy construction of pipe lines, etc., or the removal of the hazardous operations to separate buildings.

Plugged sprinkler heads and frozen sprinkler systems are cases for rigid inspection. Plant temperatures should be regulated to prevent freezing.

the fact that reduced insurance premiums soon pay for sprinkler protection, and well they might. A short time ago the Grinnell Company made an investigation of sprinkler installations in 100 furniture factories, requesting the following information:

(1) How long have you been protected by automatic sprinklers?

(2) During that time how many fires have they put out?

(3) What type of construction is your building?

(4) Has the sprinkler equipment materially reduced the cost of your insurance? Give original and present rate.

(5) What do you consider the greatest benefit of automatic sprinklers? (a) Reduction in insurance. (b) Prevention of business interruption. (c) Protection of lives of employes.

The data compiled is too long to present complete in this article, but a summary of it is very interesting:

(1) The average number of years in which the system had been installed in the 100 furniture factories was twelve and a half. The maximum length of time was forty-five, and the minimum six months.

(2) The total number of fires since installation of sprinklers which the latter put out was 124. Among the factories having fires, the average was almost three each, while a considerable number had had no fires at all. One concern had had twelve fires in thirtyfive years, while another had suffered twelve times in six years.

(3) Twenty-seven out of 100 had frame buildings, while seventy-three had brick, or combinations of brick and concrete, brick and frame, brick and tile, or brick and ironclad.

(4) The average insurance rate before installation was $2.79, and after installation it was 46 cents. The greatest reduction was from $6 to 70 cents, and the smallest was from $2.45 to $1.

(5) In answer to question five, twentythree firms were of the opinion that all three reasons were of equal importance, while forty contended that the chief value of fire protec

tion

was prevention of business interruption. Twenty-nine felt that the reduction in insurance rates was the main consideration, while the balance felt that the protection the sprinkler syst: m afforded the lives of their

Few Experiences

All sprinkler system manufactur- employes was 'he most in pertant thing. ers offer special protective devices to prevent corrosion of sprinkler struts and to protect the sprinkler heads from damage.

An instance in Detroit where insufficient water supply permitted a sprinkler-protected building to burn to the ground was that of the Wadsworth Manufacturing Company, producer of automobile bodies. The fire started outside the building, the flames entered several windows at once on different floors and the drain on the water tank was consequently so great that the available supply was gone before the fire had been extinguished. It is interesting to note that the larger equipment needed was in the factory when the fire occurred, but had not yet been installed because of the rush incident to speeding up output to meet increased demands for the factory's product.

Insurance Rates
Sprinkler companies dwell upon

Among the interesting events which follow every fire, none, perhaps, is of greater interest than the reaction on the part of the factory officials. No one suffers a fire loss without the gain of valuable experience. In an endeavor to pass on to our readers the ripe experience gained by those who have suffered, we approached a few of them for information, and from their replies we are able to present the following:

On September 13, 1920, the Udell Works, Indianapolis, suffered a loss which totaled about $40,000. A. W. Cobb, vice president, gave us the following information, which is ripe following information, which is ripe with suggestions:

We have your inquiry regarding our fire. We have our factory sprinkled. The fire started in our finishing room-the worst possible place in the whole plant for a fire. It was caused by a leak in our dipping tank which is located in a very close room, and as the fire occurred at 12 o'clock at night all ventilators and windows were closed, confining the gas from the tank to this room.

tern.

Our night watchman while endeavoring to repair the leak set his lantern about eight or ten feet from the tank and proceeded to plug up the hole in the tank. While doing this it seems that a flash came from the lantern, although it did not explode, and the place was afire. Evidently the gas ignited from the lanHe came very near being badly burned. One hundred and twenty-eight sprinkler heads went off and held the fire so that when the department arrived it had made no headway and prevented the joists and roof from catching fire. When the firemen arrived luckily our finishing foreman and finished goods stock man was on the job. They, knowing the location of everything, directed the firemen to the extent they put the fire out without any material fire damage. Probably $500 will cover it. The water damage was fierce.

We employed professional adjuster to represent us and the adjustment was made promptly and for full value of the loss, which was about $40,000. We also had a "Use and Occupancy" policy on our plant which we would highly recommend to any manufacturing concern, as it is a great assistance in taking care of the overhead while a plant is closed.

We have all of the usual fire apparatus available to take care of almost any fire, still the sprinklers did the work. We certainly have occasion to feel very thankful that we come out as good as we did as we were only closed about three weeks and have nearly fully recovered from the effects.

My suggestion would be put pilot lights through the factory on three-way wires so they could be cut in when the watchman goes into the department and cut out when he leaves, keeping them burning always at night, supplying him with an electric lantern or flashlight to get into dark corners and places not covered with pilot lights. If this installation had been in our plant we would not have had a fire.

Some time ago the Lux Fibre Furniture Company, Waukesha, Wis., had two small fires. Charles E. Nelson, general manager, was kind enough to give us the following information concerning these fires:

Answering your recent letter, we will advise that we have recently had two small fires in our factory.

They both started from our picking machines, which we understand is a common occurrence. The first fire was put out by our own men with our fire extinguishers. The second fire was hot enough to explode a dozen sprinkler heads, and this system promptly put out this small fire. We have two acres of floor space, and would not operate without the sprinkler system. We consider it next to impossible to have any large conflagration with our sprinkler system. This system not only saves in cost of insurance, but it also assures us of continued production.

We have just learned from a manufacturer of shoddy that they have a hose attached and extending to each shoddy machine, so that the operator, instead of turning in an alarm, can immediately put out the fire with this hose. We are going to install the hose connections to each picking machine for added protection. We believe in taking all precaution possible against fire.

Experiences of this character could be given without end, but they would avail but little. The fundamental facts are that fires will occur, and that furniture factories are very liable to them due to the character of their work. Means should be taken in every case to should be done. prevent them, but this is not all that Equipment should

be at hand and men instructed to use it so that little fires can be kept from becoming big fires, and additional equipment, in the form of sprinklers, should be installed to take care of the big ones should they

occur.

WH

THILE the prime requisite of any costing system is to accurately determine the total cost of product, there are other features to be recognized as essentials if the greastest value of such work is to be realized. If more than one class of product is made it is important that costs of separate classes be had. It is also very desirable to know costs of distinct processes through which products pass. It is equally essential to the proper control of cost to be able to mark the line of division between the cost of marketing and production, and to separate the cost of "Material" from "Labor." In short a good system of cost finding should give analytical information of the sort which is usable.

One of the first steps in determining cost is to group the elements into the distinctive factors of "material," "labor" and "expense." At first thought this appears so simple as to be hardly worth discussing, and yet this very feature brings out one of the reasons why it is so difficult to compare detailed costs between plants manufacturing similar lines. One member of the industry will include the wages of some employes under "burden" while another will retain them in "labor"

costs. One classes such items as sand paper and tape as "materials" while another puts them into "overhead." One charges "power" with the fuel value of refuse burned and

makes a corresponding credit to "material" while another takes no recognition of the condition which makes this appear to the former as the logical thing to do. It is the custom in some concerns to charge

"discount on sales" to "selling expense," while others charge this item to "administrative expense."

And so the list of points in which there are essential differences in costing practice among members of the industry might be almost indefinitely extended. It would seem imperative to recognize certain principles of costing as standard if interchange of comparable cost information and the stabilization of markets is to be brought about.

By H. D. POTTER

Cost Engineer

Many men are of many minds and each has his peculiar point of view, and there are some features of costing practice which have been argued pro and con for many years

H. D. Potter

and are still popular subjects for Howdebate among accountants. However, it is not the mission of this text to split hairs on non-essentials, but to try to suggest logical and practical ways and means for obtaining usable cost information. Therefore, in the following analysis of furniture cost, issue will be taken with the author on the allocating of some of the items. Indeed, if he were to follow theory alone, he, himself, would find the grouping inconsistent in some cases. It makes little difference whether the wages of a watchman are charged to "administrative expense" as a cost of protection to invested capital; to factory "burden" as "indirect labor," or to "labor" as a part of the direct cost of product. Especially would this be true if all members of the industry followed the same practice. It is therefore perhaps not out of place to repeat that the purpose of this as well as succeeding chapters is to present costing principles and methods which are most practical, and that where economy of time as well as of expense may be realized by sacrificing some inessential molecule of theory to expediency, no scruples of concience will interfere. It must also be borne in mind that the groups here given include some items which do not occur as a part

of the expenditures of some plants, and that many items not specifically mentioned form a part of the cost of products in others, and that this outline is intended only as a typical cost analysis.

A

The volume of cost may be compared to a river which is formed by the confluence of the streams of "material," "labor" and "expense,' which are fed in turn by the smaller tributaries of expenditures which go to make up these factors. graphic chart is often helpful in visualizing facts and reference is here made to the chart of furniture manufacturing cost shown on the opposite page. In the lower right corner is an insert of an elementary chart. It will be noted that "labor" and "manufacturing expense" or "burden" compose "conversion cost," which is only another name for "manufacturing cost." It is worth while to note this fact, as the cost of converting raw materials into finished product is the operation on which the success or failure of producing depends, and as will be pointed out later, is the cost on which profits should be calculated. By adding the cost of "material" to "conversion cost" we have "factory cost" in other words, if the functions of administration and selling were conducted in a separate office across the street from the plant, the entire expenditures of the latter would be represented by this title. The factory has nothing to do with the problems of financing or marketing. These form a separate group and when added to "factory cost" form the entire cost of marketed product from the time the material enters the plant until the proceeds from the sale are banked and dividends paid.

As the expenditures for "material," for "labor," and for "expense" will be treated in detail in future chapters, a tabulation of the elements composing each division will suffice at this time:

FACTORY COST
MATERIAL

Lumber
Plywood
Glue
Ornaments
Glass