N. A. C. A. BULLETIN

Transcription

1 U T rn7,, a r t. lm N. A. C. A. BULLETIN Vol. XV, No. 22 July 15, 1934 I N TH REE SECT / Sectio L113RARY SON OF I N T H I S I S S UE T h e Value of a Material Control System, by George Nairn Accounting and Stock Control for a Producers' Cooperative Associa. tion, by A. S. Kayser T h i s bulletin is published semi - monthly by the Nat i o n al As s ociat i on of Cost Ac co u nt a nt s, B ro ad wa y, N e w Y o r k. Subscr iption price $ per year. E ntered at t he Post Office, N e w Y o r k, N. Y., a s s e c ond c l as s mat t e r Au gus t 28, 19 25, un d e r t he Ac t of M a r c h 3,

2 E D I T O R I A L D E P A R T M E N T N O T E Competent observers of the current depression agree that in at least one respect business has profited by experience gained in previous depression periods. The depression of was rendered more severe because it came at a time when most retailers, wholesalers and manufacturers had accumulated large inventories of merchandise and raw materials at high prices. The experience gained from that depression led to the practice of "hand -to- mouth" buying so that losses from the shrinkage in the value of excess inventories have not been nearly so great during the current depression as they were in Business has learned that it is dangerous to tie up large amounts in inventories, not only because of possible losses due to price changes but because of the costs connected with carrying such large investments and the possibility of losses from obsolescence and changes in demand. But realizing the desirability of keeping inventories at a minimum is only the first step. The really difficult problems are those connected with putting this theory into practice, and these problems of inventory control are the logical work of the accountant. Depressions have taught business men the need for inventory control, accountants have provided and are providing the means. Considerable of a general nature has been written on the su bject of inventory control, along with some excellent material of a more specific nature. But inventory control problems vary widely from one concern to another and it is often the problem of fitting an inventory control plan to a specific business that gives the greatest trouble. Herein lies the value of the case study, where the author discusses his own problems, the methods used in attacking them and the results achieved. In this issue we are publishing two case studies relating to inventory control which will no doubt be of considerable value to accountants faced with the same problems as the authors of these two articles. The title of the first article, "The Value of a Material Control System," does not frilly indicate the field covered by this contribution. The author, George Nairn, not only demonstrates forceably the value of material control but offers from his own experience many valuable suggestions for making it effective. Mr. Nairn is a native of Bridgeport, Conn. His experience with industrial accounting began with the American and British Manufacturing Company where he served for two years as Cost Accountant, before becoming associated with the Lake Torpedo Boat Company in the same capacity. After 9 years with this company he transferred to his present position with the Bridgeport Brass Company. He has served this company for the past ten years, first as Paymaster, and for the last four vears as Material Control Supervisor. Our second article deals with "Accounting and Stock Control for a Producers' Cooperative Association." The author, A. S. Kayser, describes a method which has been developed by the California Almond Growers Exchange for greatly simplifying a complicated accounting and stock control problem. Mr. Kayser has had a wide variety of experience in both public and private accounting. His public practice has been centered in San Francisco in the employ of Haskins and Sells, William Dolge and Company and with his own firm. In addition to experience in other fields of private accounting, he has had considerable contact with the paint industry having served as Secretary of Bass - Hulter Paint Co., Assistant Controller of National Lead Co. of California, and Assistant Controller of General Paint Corp., all of San Francisco. Since 1933 Mr. Kayser has been Auditor for the California Almond Growers Exchange of San Francisco. COPYRIGHTED BY N A T I O N A L A S S O C I A T I O N O F CO S T A C C O U N T A N T S JULY 15, 1934

3 T H E V A L U E OF A M A T E R I A L C O N T R O L S Y S T E M By George Nairn, Material Control Supervisor, Bridgeport Brass Company, Bridgeport, Conn. HE subject of excessive inventory costs is one which the Twriter believes receives much less attention and consideration than various other items from which the results obtained are not comparable with what can be accomplished through the setting up of a material control system. The large automobile companies and those engaged in mass production have in the past few years gone into this subject carefully, realizing that high inventories are no longer a sign of good management but, on the contrary indicate the lack of it. Often an excessive inventory and the high costs involved in maintaining such an inventory have proved to be the factors most seriously affecting the very existence of the company. This item is of such vital importance to all types of business, both manufacturing and otherwise, regardless of size, that a material control system of a nature that will adequately control the amount of the inventory is an absolute necessity in any modern business today. The savings that will be accomplished with this in effect are far reaching and can only be appreciated by a concern that has established such a policy. The writer will endeavor to show the value of a material control system by presenting the following: (a) Actual experiences in the reduction of inventory; (b) Excessive costs of a high inventory. The facts to be presented are those secured from the operation of a system set up in a manufacturing plant whose products are varied in nature and where the cost and production problems are much more complex than those in a concern where one day's work is a repetition of that of the day previous. The inventory in this concern had been steadily increasing over a period of time when the task of reducing and controlling it was placed under the Accounting Division. There followed several discussions with reference to the proper procedure to be followed in connection with the reduction of the inventory. These discussions resulted in the decision to start with the raw material, for it was believed that immediate progress could 1283

4 N. A. C. A. Bulletin July 15, 1934 be made at this stage and that whatever results were accomplished there might also be reflected in the work -in- process and finished - stock inventories. An inventory of raw material was taken and from that point on a perpetual card inventory record showing the size, class of material, weight, location, the name of the article and the order number for which the material was received was used. Upon completion of this inventory, which totaled approximately 1,750,000 pounds, the various items were checked with the orders for which the materials were purchased. This was done for the purpose of finding the reasons which had caused such a high inventory. They were as follows: (a) Materials which had been received on orders that had been cancelled or held up by customer had continued to accumulate, no effort ever having been made to use these materials on new orders. (b) The sources of material supply had shipped materials in excess of what was ordered, the excess in some cases being of a considerable amount. (c) The Production Department had placed order after order for materials of a more or less standard size. This had been considered bank stock (material carried to give quick service to customers), but the quantity on hand had been far beyond what could be used over a period of months. (d) Materials had been ordered from the source of supply for immediate shipment when the actual processing of the materials was not to start until three to four weeks after receipt of same. (e) Materials had been received for new items, but the blanks had not been cut because the customer had made a change in specifications. ( f) Materials had been ordered in advance of receiving actual orders from customers; the orders in some cases never materialized. (g) A too optimistic viewpoint had existed in the Sales Department regarding sales of standard items of manufacture. (h) Materials had been ordered for the entire quantity of a customer's order, when customer specifications for delivery of finished product were spread over a period of months. 1284

5 July 15, 1934 N. A. C. A. Bulletin After ascertaining these causes, a plan was developed whereby all material orders were first approved by the Material Control Division before being put into effect. Definite rules governing the methods to be followed in the ordering of materials were adopted, as follows: (a) Materials were ordered in quantities sufficient to take care of the immediate specifications of the customer or for an economical run in the factory. (b) The sources of material supply were notified that over shipments on orders would be limited to 5% of the amount ordered. (c) The policy of ordering materials in advance of receiving orders from customers was discontinued. ( d) The ordering of materials for bank stock was discontinued and the vendor requested to stock such materials for which there was a very regular demand on our part. ( e) A more conservative policy of ordering materials for standard items of manufacture was adopted. (f) All materials on hand for which there were no customers' orders were applied against new orders, either by a slight change in the size or by taking a scrap loss by using materials of a size larger than was necessary. (g) A more accurate follow -up on materials held up by customers war instituted. After these methods became effective and in operation, the results expected soon materialized. The inventory began to decrease almost immediately, the percentage of decrease amounting to approximately Solo or 9oo,000 pounds in a period of six months. It continued to decrease thereafter until the total reached a figure Of 257o of what it had been originally. When it became apparent that the methods adopted for the reduction and control of the raw material had been productive of results, plans were laid for finished stock control. A finished goods inventory was taken and transferred to perpetual inventory cards set up to carry the necessary information to keep this inventory at a minimum. The reasons for an excessive inventory of finished stock were somewhat similar to those given above, i.e.: 1285

6 N. A. C. A. Bulletin July 15, 1934 (a) Production overruns on customers' orders. ( b) Banks of finished products carried for customers. (c) Materials processed in advance of customers' specifications. ( d) Materials held up by customers. (e) An excess of standard items of manufacture. The methods by which this inventory was reduced and controlled were as follows: (a) Production overruns were controlled on practically all new orders by holding the vendor to a 5 1 jo excess on raw material, there being no better point to control this item than at the source of material supply. ( b) Standard items of manufacture were held to a minimum amount sufficient to give good service to a customer, but in no case was a larger stock permitted than what was necessary to meet demand for the period of time needed to manufacture additional quantities. (c) All new customers' orders received were checked first against the perpetual inventory records and if there was on hand any material similar to that ordered, the run in the factory on the new order was reduced accordingly. (d) Banks of finished goods were reduced, the only amount carried being that which the customer gave definite instructions to carry with the agreement that it would be taken within a reasonable length of time. (e) Materials were not processed months in advance of specifications by customer. ( f) A monthly inventory report showing the value and the number of pieces of all items in finished stock was made up, copies of which were forwarded to the company executives, the Sales Department and Production Department. This report in addition to showing the number of pieces of any article in stock was classified according to commodity, and showed the name of the customer for each article and the period of months that the material had been in stock. (g) In addition to the monthly report, the Material Control Division furnished the Sales Department, on a new form set up for the purpose, the individual items which had 1286

7 July 15, 1934 N. A. C. A. Bulletin not moved within a period of 3o days. This form gave the name of the article, the amount on hand, the name of the customer and whether the material was on order or an excess lot. (h) Upon receipt of these reports, the Sales Department would request the customer to accept the material which was an overrun on a previous order and request immediate release on material which had been held up by the customer an unreasonable length of time. These reports proved their worth for the action taken by the Sales Department in the disposition of this material was the means of reducing this inventory considerably, and no doubt effected real savings in getting disposition of the items which were of nature where obsolescence would become effective in a short period of time. The reduction in the finished stock inventory through the procedure outlined, was of a very high percentage and this reduction together with the reduction of raw material increased the turnover in the plant considerably and effected real savings in keeping to a minimum the costs listed below under the various headings: Excessive Costs of a High Inventory (a) Market Depreciation The experience of the last four years has made every concern appreciate the danger of carrying excessive inventories because of the heavy inventory adjustments made necessary by a drop in market price. The losses sustained have in many instances wiped out concerns that paid little attention to the control of their inventories. (b) Taxes Another heavy burden of costs is reflected in the taxes paid for high or excessive inventories. These costs can only be reduced by the cutting of inventories. We must appreciate that taxes in the future will not decrease to any great extent and that the only way they can be kept to a minimum is through this procedure. 1287

8 N. A. C. A. Bulletin July 15, 1934 (c) Interest Costs Interest costs savings are realized through the reduction in the inventory account, a reduction of $50,00o representing a saving of $3,000 in this respect. ( d) Obsolesence The losses that come under this heading are usually very heavy if a thorough check is not kept on the excess or overruns of articles that are not standard items. Therefore every effort should be made to get the customer to accept any such items before they go out of the picture. These losses are usually buried in the inventory adjustment at the end of the year and would go a long way toward paying for the cost of a proper control of inventories. (e) Equipment The tie -up of equipment such as tote boxes, skids, bins, etc., makes it necessary to purchase additional equipment of this kind to take care of the active materials flowing through the plant. This is an expense that can be reduced considerably by the reduction of inventory. ( f) Dirty Material Extra labor costs become necessary on materials that remain in stock for a long period of time, since the materials accumulate dirt and dust that must be removed before processing, otherwise tool trouble will develop or the materials will contain scratches and marks after processing. (g) Loss of Space Extra labor costs are considerable when there is an excessive inventory, especially in a plant where space is limited since the slow- moving materials must be moved continuously to make room for the active materials. This expense is reduced to a minimum when the materials are alive and active. Turnover The goal that every business should strive for is turnover, the greater the number of times per year, the more profitable the business. In this lies the reason for the success of many concerns. 1288

9 July 15, 1934 N. A. C. A. Bulletin ACCOUNTING AND STOCK CONTROL FO R A PRO- DUCERS' COO PERATIVE ASSOCIATION By A. S. Kayser, Auditor, California Almond Growers Exchange, San Francisco, Cal. ROBABLY in most cooperatives, the greatest volume of clerical work is occasioned by the necessity of accounting to hun- P dreds or thousands of members for their individual contributions and keeping track of the stock in various "pools" until finally disposed of. This is a requirement not felt by the commercial buyer. It is readily apparent therefore that methods must be found to handle this great mass of detail cheaply and efficiently if the cooperative is to compete with the independent merchant on favorable terms. This we feel we have accomplished by so arranging our work as to practically eliminate all posting to growers' ledgers and to perpetual inventories. This method has eliminated a very large percentage of our detail work and at the same time has secured for us more accurate and up -to -date information. Before explaining these methods it is necessary that the particular requirements of growers' accounting be briefly outlined. Requirements In the California Almond Growers Exchange there are six major varieties of almonds to be handled. Five of these in turn are graded into six distinct grades. There are many other miscellaneous varieties but the same principles apply in connection with their handling and they need not be discussed at this time. Each of these different grades constitutes a separate pool and must be accounted for separately. As deliveries are received from growers, advances are made depending on the variety and grade delivered. These advances, of course, must be accounted for by grade. As the crops of the various variety and grade pools are exhausted, such pools will be closed by paying the grower an additional amount represented by the difference between the final pool rate and the rate already advanced. It is obvious, of course, that it is impossible to determine in advance which pools will be closed 1289

10 N. A. C. A. Bulletin July 15, 1934 Principd Place d Bwf[sal 311 GIIIomA Street D CALIFORNIA ALMOND GROWERS EXCHAtVGE w... S A N F R A NC I S C O. C A L I F _ RE C E I V E D F RO M A D D RE S S RE C E I V E D A T m. w wu. w w o a.. Y wu u.. wo a wu T r o l.. r u Y.. wt ww oe ma or. oa ww t www: T alur. w. wr w w Tw I ws e e wu Tl R r o r u e A. VARI [ TT W [ I OI I T I aw F [ Y M f Y Y Y Y GWOIwI AlrrswJ M O Y M I i cll w, E X H I B I T A 1290

11 July 15, 1934 N. A. C. A. Bulletin : A U FORNIA ALMOND GROW MY [ KCHAN[ t A L N O N O [ I N [ N [ L L GRADE [ MEET A T [ I S, _ e a On [IAr Gi i r =. IL IW [O A T WrA 0. R_ RO W M ' [ N A M [ No ol. r vr. r l0r. f o. 1. O. AD M RA D[ O A T I [ ) _ T L f T [ R _ MA V A R I [ T Y O R O W [ R N O. O r s Z n u. r s O wa T N O. x x u[ oiaho.. ILC No. - - OLG[NSTATE N N O. I U. I T A N p w w O a I o O F T LOT NO - - V A w I [ T V %..I. _-»mo " x x ' x _ K N -xre - f O R O_W ER + 'Pa I N O. O R A O t l [LacT O I A U O N D - R L O C x N 0. if I IO O F I14 V A R I 1I _ A 6 O L O [ I T STATE f I M R A [ O O R L H C I L f u TO T o L T Y z a O w. N i x N[N x O R a W L R N O _ S E T A O [ f T N O. { I u N o BLOCK NO II II II x z.iw e a wfronr G. L. STATE. I [ w R A I O O w. N I [ l L II Ioos I T T_T I11 W C T I O M - c a r I ca rwoc_i wua l.r s j L H [ [ T L I N A R V [ r A O V A N G 6 E X H I B I T B 1291

12 N. A. C. A. Bulletin July 15, 1934 first; therefore, our system must be sufficiently flexible to permit of segregating the records applying to particular pools whenever necessary. Deliveries are originally made by growers to various warehouses throughout the State where they are test graded and later transferred to the central plant at Sacramento; and it is necessary, for efficient operation, that the Plant Superintendent (as well as the Sales Department) know at all times what stocks are on hand at each of the warehouses and also the quantity of each grade which should be produced from each variety as indicated by the test grading. Finished stocks, that is stocks that have been graded and otherwise processed, are maintained at various eastern warehouses as well as the central plant, and must be accounted for at all times by variety, grade, and crop year. The Problem The principal problems, then, from the standpoint of accounting effort, may be said to be: i. Receiving and accounting for all deliveries by growers, a. Accounting for all advances made on account of such deliveries, 3. Final settlement to growers interested in the various pools as completed, 4. Accounting for all stocks from the time they are first received until finally disposed of. Methods The first three items are so closely related that they must be considered together and in connection with each other. The fourth item is, of course, a separate problem of stock control. The Accounting Department procedure, therefore, will be considered in two parts. I. System in Use for Recording Receipt of and Settlement for Growers' Deliveries For accounting for growers' deliveries, advances and final pool settlements, the following forms will be used by the Accounting Department: 1292

13 July 15, 1934 N. A. C. A. Bulletin Growers' Rec ei pt s E xh i bit A Grade Sheet E x h i b i t B Recapitulation of Receipts by Warehouse, F or m E x h i bi t C Summary of Deliveries and Advances by Grade, Form Tor E x h i b i t D Summary of Receipts, Advances, and Net Payments for all Warehouses, Form 7o8- A...Exhibit E Deliveries are made by growers to the various local warehouses and Growers' Receipts are issued by the warehousemen. Later, these deliveries are tested as to grade and a Grade Sheet is issued showing the percentage of each grade contained in each variety. The stocks are then stored by variety until they are transferred to the main plant at Sacramento. Upon receipt of a Grower's Receipt and Grade Sheet by the San Francisco Office, these are compared to see that they are in agreement, after which the Grower's Receipt is summarized, by variety, and posted on Form 708 (Exhibit Q. The Grade Sheet is in the meantime priced at the advance rate for the respective grades and varieties, and extended to show total advance. The net amount of the check is then calculated by totaling all advance amounts and deducting any charges. The total of such advances, deductions, and the net amount of checks is determined by adding all Grade Sheets, and is then posted to Form 7o8 The original and triplicate of the Grade Sheet are given to a typist for preparing checks. After all checks covering deliveries to the individual warehouses have been prepared, a total will be run and compared with the amount of net checks shown on Form 708 for such warehouse, thus proving the accuracy of the checks. Checks are then mailed with the original of the Grade Sheet, and the triplicate of the Grade Sheet is filed in a grower's file, thus becoming a Growers' Ledger. The second copy of the Grade Sheet is a "pull apart peg board" sheet; that is, it is perforated so that each of the varieties may be separated. After separation, all of the individual Grade Slips are sorted by variety and summarized by grade, the totals being posted on Form Tor (Exhibit D). Total weight of each variety 1293

14 N. A. C. A. Bulletin July 15, 1934 RECAPITULATION OF RECEIRS RECAPITULATION OF RECEIPTS W M.. D o. 0 h R n r i r / N x Gr. SI A Nx I y. 6. e. n ) Ad. nc f n, w,..,,, w., w, A d. 0 S Fr.iEAl f.. G. 4 6 y H. r. M H n. r Ad.. f -. Ad.. S OI M. f 0 4. f f S f f - V w r r l R V. J U N O S V w r l r.. Y V N O S Nw r. r «I N - P - 3 T O D w Y O O. T [ I. X L 1. X L N. r l e. N g l e. P. d w y N. L. T u n f. l A. w tl E;N.r E4W C. P. S. C. P. S. C Cwnw.r ci E.. 6 G. W.. S. G. W.. S. H rddr. R Je. d n Kl. c lnl. H. r da. R 1«d. n KIctWT4 4 p. M a e l. p V. 1 e < u. -.Ih Lh..n.. tltl r.nnmn y a A, n A B ran.r... rauer.n. p ReWhr S.. d n q RwY. r S n d l l p so.. r S w i l l %. L S i " X L SJ b A. II W N W S.S. S. S. S. S. N Selr.n seu... T.npen. T.np. MN TOTAL _ TOTAL NUTS CA.d.d.;M F Nn. I, t..d d W. h A h A d.. A w r. G.o... H..h $r; <LriEAr. H. I h E x a r a T C 1294 E x a mr E

15 July 15, 1934 N. A. C. A. Bulletin FORM D X01 E Q O G R A D E \S H E E T NOS. W AREHOUSE O O O D A T E VARI ETY P I L E P O UN D S T O D A Y AD VA NC E _ AMOUNT IRATE G R A D E P O UN D S T O D A T E S E L E C T B. D. G. S. S IE R R A P. 5. S UB S. C H A F F. T O T A L P R E V I O US BAL ANCE SHIPMENTS BAL ANCE O N H A N D EXHIBIT D 1295

16 N. A. C. A. Bulletin July 15, 1934 shown on this form is then compared with the total shown on Form 7o8. After totaling the pounds on Form 701 this form is priced at the advance rate and the total advance calculated by multiplying the total weight by such rate. The total of all advances so calculated will be checked against the advance amount already posted on Form 7o8. It will be noted that this method checks not only the total tonnage and advance amount but also all pricing and extending of the individual deliveries. After these verifications have been made, all Forms 708 for the day will be racked on the peg board and cross - footed to Form 7o8-A, (Exhi bit E), which will show the total deliveries from all points for the day, as well as total advances, deductions, and checks. Total advances as shown by Form 701 and the total of checks for the day as shown by the check register will be compared with Form 7o8-A, thus securing verification of the accuracy of the entire day's operations. Year -to -date figures are then shown on Form 7o8-A. This form is made in duplicate, the original becoming the daily report to management showing all deliveries and payments to date. After the daily totals have been proved, year -to -date figures will be brought forward on Form Tor by adding today's figures to the total -to -date on the previous day's report. Through this method we know at all times the total amount of deliveries to each location and the total amount advanced thereon. After the totals -to -date have been recorded on Forms 701, any shipments from the local warehouses to the central plant at Sacramento will be recorded in the lower section of this form, and the balance on hand brought down. The total of all such deliveries for the day will be shown on the Central Warehouse Form Tor as total shipments in. This total is obtained by racking all forms showing shipments out and cross - footing. This latter form then, instead of showing the balance on hand, will show the total deliveries received, both directly from growers delivering to Central Warehouse and from local warehouses. By this method, after the entire crop is received and transferred to the Sacramento Plant, the Sacramento forms will show the entire deliveries of each variety whether received direct or from other receiving points. This is important since this figure is the 1296

17 July 15, 1934 N. A. C. A. Bulletin figure transferred to the Tonnage Record (explained in the next section) and forms the connecting link between the two systems under discussion. It will be noted that Form 7oi is prepared in duplicate as to year -to -date figures and balance on hand. As soon as completed, the carbon copy of this form is torn off and forwarded to the Plant Superintendent at Sacramento. This furnishes him daily information as to the deliveries to all points as well as to stocks still on hand. After Form 701 has been completed the Grade Slips are filed according to warehouse and sub - indexed according to variety. In this way they are immediately available for use at such time as any particular pool is to be closed. At time of pool closing it is only necessary to withdraw these Grade Slips from the files, post thereon the final pool rate and calculate the total credit. (The duplicate copy of this form has space provided for showing final pool rates and amounts.) In connection with this second "pull apart" copy of the Grade Sheet (not illustrated), the upper section has a place in the right -hand side showing the number of bags returned. This slip is filed according to grower number and serves as a credit to the grower for all bags returned, this amount to be credited to his account at such time as the pools are closed. The fifth section of this pull -apart copy of the Grade Sheet shows the total weight delivered by the grower regardless of variety. This slip is filed also by association and according to grower number, so that at any time it is possible to determine a grower's total deliveries of all varieties to his local association. This information is necessary for assessing local association charges which are based on total deliveries. II. Methods for Controlling Stocks The control of all tonnage by variety, grade, and location without posting has been accomplished by synchronizing all of the various reports, wherever issued, so that they can be racked together on a peg board and totalled to a summary record. The various reports and records to be used in this way are as follows: Grader Production E x h i bi t F Blend Report E x h i b i t G 1297

18 N. A. C. A. Bulletin July 15, 1934 S -1G n 0 Jll % C JS A C Q E T Q " ^ J o n` J 0 CALIFORNIA ALMOND GROWERS EXCHANGE GRADER PRODUCTION DAILY REPORT ALMONDS IN SMELL PROD, GRADE ORDER N.. GA[P[S I DE S IT his LIFORNIA ALMOND GROWERS EXCHANGE E X H I B I T G M W t N M. _..._. 4n. r. (Below) w[igmt rrprreed S.I.N EIM Di.r...d G. W M S. 1. Geld. i1.1 (U..eM.dl O.iE:..l S».. P.0 Sh.N R.". d.d Si.n Lug. S N I SACRAMENTO RANT s ' t X D E S I T BLENDING REPORT ALMONDS IN SMELL 1 0 PL[ MD[D I. D. KEN INTO.. i w w. [ r.. T.. A 219 N o r ow r i. R. I. eh GR D[f wn[xt r Pl[n D[D DYT ER Dtl stvw.[e11g IN Hu N. t M. N. S. «P i. q. D.. 1 E Ch.R S. 6,,. u I u d Pne H.. I Pi t. N.. 2 PN. N.. I StkH1g1,N TOTAL WEI GHT L M C. u.d M E»M R Lew R.,W N... CMECNID R POSTED S. I -. Eh. Di,...d G.Id.. St... G.M. St.,. IUnwrt, i. 0 S». r. P. 0 SR. N Si nn. L r y. Sm.n F...1. Ri l. <h...._.... M. N. 1 M N s.m.i.q. D.. 1 E ChA S. b. [ Mdu d E X H I B I T F Pile N.. I (Above) Pi le N.. 2 [. N.. I H»NiEhr TOTAL S.h<r G I dm Sl M 1 G. W M S I N. IU InN d1 O iq:.d Siur P.0 sh.n R.q..a.d M. J i w. h..uh bje <b M. R. S.!.. h Dmr E CNA 5.64.dod N» N r: W Ne. J S1:<NiEhh TOTAL 1 i 1 i i

19 July 15, 1934 N. A. C. A. Bulletin Transfer to Spot Stock...Exhibit H Gain and Loss Report... Exhibit I Transfers to Sheller... Exhibit J Sales Shipment from Sacramento. Tonnage Record (not illustrated) (not illustrated) Each of these forms with the exception of the "Tonnage Record" is serially numbered so that all reports can be accounted for. These various reports (excepting the Tonnage Record) may be segregated into three different types Type i Covers transactions which add to or take from the total tonnage such as production, sales, losses, etc. Only one copy of such reports is furnished the Accounting Department. Type 2 Involves transfers of stocks from one location to another. (Transfer to spot stock). This type of report is prepared in duplicate, one copy (the debit) being filed with the location receiving the material and the other (the credit) to be filed with the location from which the material is shipped. Type 3 Involves changes in grade or variety, but not location. In this case, also reports must be furnished in duplicate. (debit and credit). The difference between this type and Type 2 is that, due to the change in grade or variety, it is necessary that the report show both the grade and variety of material used and the grade and variety to which transferred. This is not necessary in Type 2, since only the location is changed. These forms are to be used as follows: In preparing the Tonnage Reports at the end of the month (or at any other time desired) each of the foregoing forms, except the Tonnage Record, will be racked on peg boards together with the Tonnage Record and cross - footed to one of the columns on the Tonnage Record. Items representing debits (production, etc.) being totalled to one of the debit columns and credit items being totalled to the credit columns. All additions are verified by adding 1299

20 N. A. C. A. Bulletin July 15, CALIFORNIA ALMOND GROWERS EXCHANGE DEBIT TRANSFER TO SPOT STOCKS ALMONDS IN SHELL From Sacramenfo TO......İD. IN. SALES RECAP. NOS. CREDIT MEMO NOS VIII GRANO I II. Is I I TO$PDT EXHIBIT I (Below) S. 1 0 I I I.. D i. d G. I d Sf. f. G. I d.. S i. f ( U 0 4 ) O, A pi g r.; d... l d G S A C RQE NT9LA NQ REASON FOR CALI FORNI A ALMOND GROW ERS EXCHAN66 GAIN & LOSS REPORT ALMONDS IN SHELL CREDIT. L. r g... P 0. S.. I I P ON" GAIN IN WEIGNT LM I N 0,91611T Hu l l. 8 M. h S... P;. g, Dud A Ch. ff S. b, i. d,, d Pd. N.. I Pi l. N.. 2 P h N.. 7 sti. W961. TOTAL D i. d G. t d.. s f. f. G. I d.. S i d. [U... d. J ) Of l g i I S i. " P-, $h. 11 R. 9,. d. d Si.,,.. L., g. M. di wn R j. f, H.11. A S P i. 9, D- & Ch. f f S. b 0-6, d EXHIBIT H (Above). ' N.. I i; N.. 2 Pi l. N.. I CHECXF.D & POSTED A, f t 0. " 1300

21 July 15, 1934 N. A. C. A. Bulletin warm uora wr eeoe. awnsae C)0C) >C CALIFORNIA ALMOND GROWERS EXCHANGE SHELLING ORDER No. SCALE SHEET Nos. ALMONDS TO SHELLERS ALMONDS IN SHELL C R E D I T... Oed A - (\ 6/ Pile Ne.... Crop Vr, _... GRADES WEIGHT TO SHELLERS Select Blue Diamond Golden State Golden State (Un rfed) Original Sierra Poor Shell Regraded S ierre La rg e Peanuts Rejects Me di um S mall Hulls & Meafs Sweepings Dust 3 Chaff Substandard Pile No. I Pilo No. 2 Pile No. 3 5fitkligh}s TOTAL Prepared By: Acct. Dept. Compared 3 Verified By : E X H I B I T 1301 J Aeet. Dept.

22 N. A. C. A. Bulletin July 15, 1934 the total column to see that the grand total agrees with the grand total arrived at by cross - footing all totals. A sales analysis is completed each day by sorting the sales invoices for variety and by totaling the pounds and value of each grade, posting the results to a Sales Shipment form (not illustrated). The grand total of this analysis is checked against a predetermined total of the day's billing, both pounds and amount. It should be noted in this connection that a special column is provided on Tonnage Record for sales, this column showing both weight and amount. The amount column is unnecessary so far as the tonnage control is concerned, but serves the purpose of completing the sales analysis so that this work need not be duplicated. Further, this method furnishes almost a perfect proof of the sales dollar record since if the tonnage is in balance the values must necessarily be posted to the proper variety and grade. In order to complete this Tonnage Record and tie up with the raw stock as delivered by growers, the total weight of the raw stock delivered as shown on Form Tor (Exhibit D referred to in previous section) will be transferred to one of the debit columns on this Tonnage Record. After all items have been totalled and shown on the Tonnage Record, this record is cross - footed (debits added and credits subtracted) and the balance on hand shown on the left -hand section. This balance section becomes the control over the perpetual inventories. The duplicate of this Tonnage Record ( "pull- apart" form) will then be separated and each section will be clipped to the top of the file of transactions which it covers, thus completing the individual transaction file, or journal. The duplicate of the balance on hand section serves as an inventory report whenever desired. Conclusion The foregoing discussion covers mainly the controlling of stocks "in- the - shell" at one point our Central Plant. Similar forms are used to control stocks at our various eastern locations and for shelled nuts. Separate reports are also provided for other transactions but these forms involve no change in principal and need not be discussed here, except to state that such forms are generally 1302

23 July 15, 1934 N. A. C. A. Bulletin of a distinct color in order to prevent errors in classifying or filing. The chart attached may be of some assistance in visualizing the operation of the system and the connection between each of the various reports and forms. CH All or CONTROL Of RECEIPTS Or NUTS1 ADVANCES TO CHOKERS AND STOCKS ON NAND AT LOCAL 4ACENDU5CS C p 4 t AI ' 4t K1FTK MAGL CA1, +1.11,.. ( 1 + l t 1 / I i N I, 1 1 I ; 1 I S T [ b 1 POSY A-?*$ GplWl1IE ` COKMRE 1K1O1B TOTALS RY VARI. IN AruLn[ sy okaoe - - TOTAL A 101 rorrb A - AND 0 1 I TOTAL 1 TO WTE F NOS BALANCE 1 1 I N i LTB:CK t p t, BC01C7Ol ( I OUPI ICAT[ T CHECKS TOTAL Or ALL SARDOUS[B ADVANCE[ CHECK (MOUNT LCOMI (A) BACRAYDITO POI41C WILL SOS TOTAL RECEIPTS INSTEAD Of BALANCE = = OP[ MTI ONC e POIY 011 RECORDS - _. j. T c o r m TO OTHER fory4 EXH IB IT K 1303

24 N. A. C. A. Bulletin July 15, 1934 SUGGESTED BIBLIOGRAPHY INVENTORY CONTROL N. A. C. A. Publications: Accounting for Material Use and Control. Bulletin I, Oct. 15, Accounting Features of Inventory Control. Bulletin I, May 15, Control of Inventories. Bulletin II, April 1, 1926 (out of print). Control of Investment in Inventory. Bulletin II, Dec. 15, 1928 (out of print). Control of Stocks of Merchandise. Bulletin I, Aug. 15, Human Element in Material Control. Bulletin I, Aug. 1, Inventory Accounting and Control for the Dyeing Industry. Bulletin II, Feb. 1, 1931 (out of print). Inventory Accounting and Control in a Silverware Mfg. Company. Bulletin II, June 15, 1930 (out of print). Inventory and Material Control in the Columbus Dental Mfg. Company. Bulletin I, June 1, Inventory Control. Bulletin II, July 1, Bulletin I, Jan. 1, 1928 (out of print). Inventory Control as Used by Taylor Instrument Companies of Rochester, N. Y. Bulletin I, Sept. 15, Material Control and Stores Accounting. Bulletin I, Feb. 1, 1929 (out of print). Material Control in a Locomotive Crane Plant. Bulletin II, Aug. 15, 1929 (out of print). General: Cost Reduction by Cost Control. Australasian Institute of Cost Accountants, Victorian Division, 440 Little Collins Street, Melbourne, Australia pp. Perpetual Piece Control as Applied to the Merchandising of Men's Clothing. Bureau of Business Research, Ohio State University, Columbus, Ohio. Perpetual Inventory or Stores Control. Chamber of Commerce of the United States, Fabricated Production Dept., Washington, D. C pp. Scheduling and Inventory Control. Society of Industrial Engineers Bulletin, 205 West Wacker Drive, Chicago, Illinois. May, pp Inventory Practice and Material Control. By F. W. Kilduff. McGraw - Hill Book Company, 330 West 42nd Street, New York, N. Y pp. Inventory Turnover The Measure of Efficient Management. Purchasing Agent, 53 Park Place, New York, N. Y. July, pp. 1304

25 BULLETINS PUBLISHED SINCE AUGUST, 1933 Distribution Cost Analysis and Its Influence on Pricing Policy (out of print) September 1, 1933 Allocation of Distribution Expenses by Classes of Product by Use of Standard Rates (out of print) September 1 Some Controversial Phases of Standard Costs September 15 The Cost Accountant as the Key Man in Shaping Policies October 1 Production Control as a Remedy for the Depression October 1 Statistical Costs and Accounting Costs October 1 Cost or Market, Whichever Is Lower October 15 Accounting for Material Use and Control October 15 Utilitization October 15 Revenue Accounting by Machine in a Large Cooperative Apartment November 1 The Cost of Operating Real Estate November 1 Progress of the National Recovery Administration November 15 Printing Cost Estimating for Price Setting November 15 Costs and Commercial Art November 15 Standard Costs for Machine Shops and Malleable Foundries December 1 Brass Foundry Accounting December 1 Presidential Address December 1 Essential Elements of Cost for Uniform Accounting Under the N.R.A. December 15 Cost Accounting for Distillers of Alcohol, Gin and Whiskey (out of print) January 1, 1934 Standard Costs and Flexible Budgets in the Brewing Industry (out of print) January 1 Selling Below Cost Provisions in Industries January 15 Accounting for Experimental and Developmental Costs February I Standards for Developmental and Experimental Expenditures February 1 Budgeting and Accounting for the Federal Government February 15 Proposed Bill Before the House of Representatives (standard cost accounting) February 15 Setting Standards for Plating and Japanning Costs March I Direct Material Costs in Electroplating March 1 The "How" of Budgeting March 15 The Flexible Budget and Standard Costs in a Business of Moderate Size March 15 Joint- Product Costs April 1 Accounting for the Canning Industry April 1 Incomplete Budgeting April 15 Profit Control in a Wholesale Paper Company April 15 Today's Management Problems May 1 Justifying Plant Investments May 1 Payroll Accounting May 15 Savings- Sharing Incentive Plan for Salesmen May 15 Cotton Mills and the Futures Market June 1 Cost Distribution in the Telephone Business June 1 Unemployment Insurance June 15 Retirement Plans in Industry June 15 Recent Corporation Laws on Stated Capital, Treasury Stock, Surplus, and Dividends July 1