Professional Documents
Culture Documents
OF
ACCOUNTING SYSTEM
for
Corrugated Fibre
Company
Compiled by
W. H. BOZELL
CHICAGO, ILLINOIS
in
2008
IVIicrosoft
Corporation
ittn7/www;:^rr.hi\/e.org/details/accountingsystenn00bozerich
ACCOUNTING SYSTEM
for
Corrugated Fibre
Company
By
W. H.
BOZELL
March
9,
1916
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INTRODUCTION
Cost accounting and cost finding in the corrugated paper industry, as in all manufacturing plants, should conform very closely to the method of manufacture, if satisfactory
results are to be obtained.
The manufacture
First.
Second.
The manufacture
two
divisions.
In view of the above facts the Factory Cost of corrugated products must be arrived
at by first obtaining the cost of the corrugated board, which is the most easily determined
on the basis of 1,000 square feet. After the cost of the board is obtained it is a comparatively simple matter to arrive at the cost of the completed boxes by adding to the
cost of the board used the additional material, such as tape, wrapping paper, etc., the
direct labor in the box making department, together with the necessary overhead expenses.
The
made up
cost of
corrugated products in
common with
is
The item of expense naturally falls into two groups. First, the Factory Expense or
Factory Burden, and second, the General and Selling expenses.
In order to properly segregate these expenses proper accounting methods are necessary
if correct results are to be obtained.
and indispensable
In order to obtain correct labor costs and to make a proper distribution of payroll
between productive and non-productive labor some method of timekeeping or production
reports seems to be absolutely necessary and the importance of this part of the work
should receive the earnest consideration of every manufacturer in your industry.
is intended to show
which should be used in order to properly
segregate and distribute the expenses and arrive at correct overhead percentages.
is
of accounting
.=1
364867
subniittiug a list of the necessary accounts (Exhibit "AA") which shows the
which the accounts should be arranged in the Trial Balance. You will notice
that the expenses have been considerably subdivided with t'he object, primarily, of showing
just what expenses should be included in each group. In actual practice, however, it may
be advisable, particularly in some of the smaller factories, to combine two or more of
these expense accounts into one.
The accounts have been divided into six groups or
classes, which will be further explained in the following paragraphs.
am
manner
in
'
'
'
'
group.
When machinery or other equipment is worn out or becomes obsolete its value will be
credited to Machinery or other equipment account and the loss charged against the Reserve
In arriving at Depreciation at least 10 per cent should be used for
for Depreciation.
Machinery and Equipment and
to 4 per cent on Building.
.'i
The accounts
in the usual
in this
manner.
Silicate of
materials as can be figured directly into the cost of the finished product an<l should not
contain any Expense items.
MANUFACTURING ACCOUNTS
It is intended to charge the Payroll account with the total amount of Wages, Salaries,
etc., paid out each month and to credit the account at the end of the month bjJournal entry with the entire Payroll for the month, at the same time debiting the
several accounts, among which the Payroll should be distributed, or, in other words, the
Payroll account
is
book
itself.
Labor.
The accounts
in this
Supervision account
is
clerks.
The Non-productive Labor accounts are intended to include all Expense Labor, such
as cleaning, sweeping, unloading cars, handling and trucking materials, etc.
The Non-productive Labor has been divided into two accounts for the same reasons
given in connecjtion with Productive Labor. If preferred, however, all of the Non-productive Labor can be carried a.s one account and subdivided in a memorandum record or
in the Payroll book itself.
this
REVENUE ACCOUNTS
The Revenue accounts consist primarily of
also included sales
group.
submitting herewith a statement showing the manner in which the Profit and
Loss Statement and Expense Analysis should be worked up (Exhibit "C"). The figures
used in this statement are, of course, fictitious, but are used simply to illustrate the
method. However, the item of profit (No. 7) should be proved against the Profit figures
shown by the Balance Sheet. If the method of accounting outlined in the previous
paragraphs is used the data for preparing this statement can be easily obtained.
I
The Factory Burden items shown in this statement should be further divided as
shown in Exhibit "D" between the Corrugated, or board making department and the
Manufacturing, or box making department.
The Productive Labor should
same manner.
In making a division between departments such items as rent, taxes and insurance
on buildings, repairs to buildings and depreciation on buildings would be divided on the
basis of floor space, power on the basis of horsepower used, making allowance for steam
used in corriigating machines, and depreciation on machinery and equipment according to
Repairs to machinery should be distributed on
the value of same in each department.
actual cost basis as far as possible.
is
obtained
by
different
UNIFORM METHOD
In Exhibit " E " the method of arriving at the Factory Cost of board is illustrated,
also the method of figuring the complete cost of boxes or other manufactured articles.
COST CHART
The method
of figuring the
cost of
corrugated products
is
also
illustrated
in
the
be outlined
in
the
will
If this
Work
is
used
it
new accounts:
Process,
Reserve for Factory Burden,
Reserve for Selling Expense,
Cost of Sales.
in
"A"
"B"
WORK
Work
IN PROCESS
Work in Process will, be debited at the end of each month with the Total Productive
Labor for the month. This account will also be debited with the total amount of Factory
Burden applied to orders during the month, at the same time crediting the Reserve for
Factory Burden account.
Work in Process will be credited at the end of each month with the Factory Cost of
goods shipped and billed during the month, at the same time debiting the Cost of
Sales account. After the above entry is made the balance in Work in Process account
will represent the inventory of all goods in process or finished.
all
The Credit Balance in this account should equal the sum of the Debit Balances of
the Factory Burden ac^'ounts, and if so, it will indicate that the percentages which are
being used are sufficiently high and vice versa.
all
be noticed by referring to the Trial Balance (Exhibit "A" and "B") that
Profits each month may be readily ascertained by comparing the Debit
the Cost of Sales account, plus freights prepaid, with the sum of the Credit
It will
the
amount of
Balances
Balances
in
ofi
Respectfully submitted,
March
9,
1916.
COST COMMITTEE:
Chas. H. Limbach
Irving Hill
James
B.
Fenton
111.
EXHIBIT A A
Capital Stock
Surplus
I'rofit and Loss
Real Estate Land
Real Estate Buildings
1-00
1.00
1.00
1
Machinery
Teams and Wagons
Office Furniture and Fixtures
00
1-00
LOO
LOO
Sub-footing
5.00
^ 26.00
Cash Petty
Cash Bank
Accounts Receivable
Bills Receivable
Accounts Pflyahl e.
Bills Payable
Personal Accounts
Paper Jute
Paper Chip
Paper Straw
Wrapping Paper
1
1
00
00
LOO
1
.00
LOO
LOO
^^^--.
Silicate
LOO
LOO
LOO
LOO
LOO
LOO
LOO
Glue
1.00
Twine
Wire
Tape
LOO
LOO
LOO
/...
Ink
$ 15.00
Sub-footing
Manufacturing Accounts
Pay
00
Roll
1.00
1.00
2.00
Sub-footing
.-
Taxes
Insurance
Depreciation
Warehouse Expense
Power
Light and Heat
Rental
Die Expense
Experimental Expense
Repair Buildings
Repair Machinery and Equipment
General Factory Expense
Sub-footing
00
LOO
LOO
LOO
LOO
LOO
LOO
LOO
LOO
LOO
LOO
LOO
LOO
LOO
LOO
$ 15.00
2.00
EXHIBIT A A
Selling
Expense Accounts
Salaries
Office Supplies
Postage
Telephone and Telegrams
Interest
Discount, Allowed
Sample Expense
Catalog
Advertising
.'
Commissions
Selling Salaries
Traveling Expense
Branch
Office
Expense
Sub footing
*.
*.
.
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
$ 19.00
Revenue Accounts
Freight, outgoing
Sales
Waste Sales
Discount on Purchases
Interest Eeceived
Sub-footing
Grand Total
1.00
60.00
1.00
1.00
1.00
1.00
63.00
$ 57.00
$ 57.00
EXHIBIT
BB
Inventory
Paper
Paper
Paper
$ 33.00
Accounts
Jute
Chip
Straw
Wrapping Paper
Twine
Silicate
Glue
Wire
Tape
Ink
Sub-footing
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
$ 33 00
.$ 10.00
Manufacturing Accounts
Pay Roll
Productive Labor Corrugating
Productive Labor Manufacturing
00
1.00
1.00
Sub-footing
2.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
l.OO
1.00
1.00
1.00
1.00
1.00
Taxes
Insurance
Depreciation
"
Warehouse Expense
Power Electric
Light and Heat
Rental
Die Expense
Experimental Expense
Repair Buildings
Repair Machinery and Equipment
General Factory Exi)ense
I'sToo
Selling
Expense Accounts
Salaries
Office Supplies
1.00
1.00
1.00
1.00
1.00
Postage
Telephone and Telegrams
Interest
Discount, Allowed
Sample Expense
Catalogs
Advertising
Commissions
Selling Salaries
Traveling Expense
Branch
Office
Expense
Sub-footing
.00
1.00
1.00
1.00
1 .00
1.00
1.00
1.00
1.00
1.00
1.00
l.OO
1.00
18.00
Revenue Accounts
Freight, outgoing
Sales
Waste Sales
Discount on Purchases
Interest Received
1.00
10.00
1.00
.'
1
1
Sub-footing
1.00
Grand Total
...$114.00
'
.00
.00
iXoO
$114 00
EXHIBIT A
$ 18.00
Inventory Accounts
Paper Jute
Paper Chip
Paper Straw
Wrapping Paper
Twine
Silicate
Glue
Wire
Tape
Ink
Sub-footing
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
$ 10.00
$ 18.00
Manufacturing Accounts
Work
Pay
in
Process
40.00
00
Roll
.00
Sub-footing
Warehouse Expense
Power, Electric
Light and Heat
Rental
Die Expense
Experimental Expense
Repair Buildings
Repair Machinery and Equipment
General Factory Expense
Reserve for Factory Burden
00
1.00
1.00
1.00
1.00
16.00
Sub-footing
Selling
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
$ 15.00
-.
$ 16.00
Expense Accounts
Salaries
Office Supplies
1-00
1.00
100
Postage
Telephone and Telegrams
1.00
1-00
1.00
1.00
1.00
1-00
1.00
Interest
Discount, Allowed
100
Sample Expense
1.00
Catalog
Advertising
100
1-00
1-00
1.00
1.00
1.00
Commissions
Selling Salaries
Traveling Expense
Branch
Office
Expense
17.00
Sub-footing
lU
$ 17.00
EXHIBIT A
Revenue Accounts
Freight, outgoing
Cost of Sales
Sales
Waste Sales
1.00
40.00
60.00
60.00
1.00
1.00
1.00
Discount on Purchases
Interest Received
Sub-footing
Grand Total
11
41.00
63.00
$114.00
$114.00
EXHIBIT B
34.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
Machinery
Teams and Wagons
Office Furniture
and Fixtures
Sub-footing
5.00
$ 36.00
CashPettv
CashBank
1.00
1.00
1.00
1.00
Accounts Receivable
Receivable
Accounts Pavable
Bills Payable
Personal Accounts
Paper Jute
Paper Chip
Paper Straw
Wrapping Paper
Bills
1.00
1.00
1.00
1.00
1.00
100
Twine
Silicate
Glue
Wire
Tape
Ink
1.00
1.00
1.00
1.00
1.00
1.00
1.00
$ 15.00
Sub-footing
2 00
Manufacturing Accounts
Work
Pay
in
40.00
Process
00
Roll
Sub-footing
I'actory
40.00
Burden Accounts
Supervision
Taxes
Insurance
Depreciation
Warehouse Expense
Power
Light and Heat
Rental
Die Expense
Experimental Expense
Repair Buildings
Repair Machinery and Equipment
General Factory Expense
Reserve for Factory Burden
1.00
1.00
1.00
1-00
1-00
1-00
1.00
1.00
1.00
1-00
1-00
1.00
1.00
1.00
1.00
16.00
$ 15.00
Sub-footing
12
$ 16.00
EXHIBIT B
Selling
.
Expense Accounts
Salaries
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
Office Supplies
Postage
Telephone and Telegrams
Interest
Discount, Allowed
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
Sample Expense
Catalog
Advertising
Commissions
Selling Salaries
Traveling Expense
Branch
Office
Expense
18.00
Sub-footing
.$
19.U0
$ 18.00
Revenue Accounts
Freight, outgoing
Cost of Sales
Sales
Waste Sales
1.00
40.00
60.00
Discount on Purchases
Interest Received
1.00
1.00
1.00
Sub-footing
41 .00
63.00
Grand Total
$l.'ju.00
$135.00
13
EXHIBIT C
Materials
Labor
Factory Burden:
Supervision
Non Productive Labor, Board
Non Productive Labor, Mfg
Taxes
Insurance
Depreciation
Warehouse Expense
Factory Cost
Selling Expense:
.00
.00
00
.00
.00
Postage
Telephone and Telegrams
00
.00
.00
Interest
Discount, Allowed
00
.00
.00
'
00
.00
,00
.00
.00
.00
Sample Expense
Catalogs
Advertising
Commissions
00
Selling Salaries
Traveling Expense
Expense
TOTAL COST
PROFIT
SALES
NOTE:
14,500.00
$ 90,000.00
Salaries
Office
10,500.00
.00-
Office Supplies
Branch
$ 65,000.00
10,500.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
Power, Electric
Light and Heat
Rental
Die Expense
Experimental Expense
Repair Buildings
Repair Machinery and Equipment
General Factory ^ Expense
4
$ 65,000.00
.00
.00
.00
.00
10,000.00
100,000.00
11,000.00
$111,000.00
14
11
200%
117%
1/9%
EXHIBIT D
Factory Burden:
Supervision
Non Productive Labor, Board
Non Productive Labor, Mfg
.00
.00
.00
.00
.00
Taxes
Insurance
Depreciation
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
14,500.00
10,500.00
5,250.00
2,625.00
9,250.00
7,875.00
200%
117%
00
Warehouse Expense
Power, Electric
Light and Heat
Rental
Die Expense
Experimental Expense
Repair Buildings
Repair Machinery and Equipment
General Factory Expense
Productive Labor
Factory Burden to Productive Labor
Mnfg.
Dept.
Dept.
70#
70#
58#
."
Straw Board
@
@
@
55.00
50.00
30.00
'
1.92
1.75
.87
Silicate
.25
479
Stock Waste
5%
.24
Total Materials
Labor Corrugating
5.03
.00
.00
Double Backing
Factory Burden
2007^,
1,000
22,540 sq.
ft.
sq.
Boxes
201/4x141/2x251/2
Selling
Expense
@
@
Test
Board
5.54
124 87
1.50
2.00
128.37
4.00
4.60
115%
136.97
17.12
12i/>%
Total Cost
154.09
15 91
Profit
Price,
175#
Tape
Wrapping Paper and Twine
Factory Cost
.34
5.54
ft
Board"
Labor
Factory Burden
.17
Net
170.00
15
EXHIBIT E
1.00
3.00
5.
3.00
6.
Selling
1.
2.
3.
4.
1.00
1.00
.00
.00
Expense
1.00
7.
Total Cost
4 00
8.
Profit
1.00
9.
Sales
5.00
4.00
3.00
1.00
4.00
4.50
.50
'
.50
Month
1.00
.50
16
THIS BOOK
AN INITIAL FINE OF
25
CENTS
gOCT 24
iH
'm
1935
A n
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UNIVERSITY OF CAUFORNIA
UBRARY