Purchase of this book includes free trial access to www.million-books.com where you can read more than a million books for free. This is an OCR edition with typos. Excerpt from book: CHAPTER II FUNDAMENTALS OF COST ACCOUNTING IN THE history of American business an excuse can be found for the prevailing lack of adequate cost systems in our factories. In a country like Germany, where competition is keen, manufacturers have learned from experience that if they are to exist at all they must know accurately what their goods cost and what prices they must charge in order to maintain and perpetuate their businesses. In this country, however, at least until recent years, profits have been large, in fact so large that a manufacturer did not need to concern himself about costs. He could quote his prices and feel reasonably sure that there was an ample margin between these prices and his costs. This condition was in part due to American tariff policies and in particular to the home market which offered a lucrative field for practically all goods which American manufacturers might produce. This happy-go-lucky period of American business, however, is past. Manufacturers who began in business when the margin of profit was large and on that account succeeded in making fortunes, have seen their profits gradually dwindle until now in many cases their industries are earning nothing more than mereinterest upon the capital invested. Competitors have sprung up in practically every line and the question of efficiency has been forced more and more to the front. Even in our smaller manufacturing industries personal supervision of the plant is not always possible. The only reliable way in which an executive can determine the efficiency of his plant is through an adequate system of cost accounting which returns to him at stated periods statements which reveal in a moment the condition of his business. New methods are being introduced and improved machinery installed in a...