Problems of
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THE HAULIER
AND CARRIER
ILEFT off in the previous article at a point where I 'had just finished explaining the reason for keeping actual records of expenditure on maintenance and tyres independently of, and in addition to, the regular weekly figures provided for in the operating-cosls record book. I had explained the reason for this and finished the article by Stating that it was necessary to check each year the actual figures against the average.
, The figures for maintenance which are set out on the fly-leaf of the operating-costs record book and which each week are debited against the vehicle are based on averages. They indicate what the owner may expect to have to spend on maintenance, mile by mile, throughout the life of the vehicle. For some time, with a new vehicle, there may be less expense, but, later on, it is more than likely that the expenditure per mile will be in excess of the figure given.
The Cost of Tyres.
The reason for keeping this figure in mind rather than setting down actual expenditure is, as I cannot 'too frequently explain, that without it the owner of a new, vehicle may underestimate his probable ultimate expenditure on that item and thus make a corresponding mistake in his charges for work done with the. vehicle. The same applies to a smaller extent in reference to tyres; the degree is smaller because, with the vehicle covering a reasonable mileage, the owner will fairly soon be brought to realize that expenditure on tyres is more than 2d. per week.
The weekly average figures are, therefore, a safeguard, but it is just as necessary to keep note of the actual expenditure and at the end of a year the totals of both must be compared. If the actual be more than the average, which is not likely to be the ease in the first year, so far as maintenance, at any rate, is concerned, the vehicle must be debited accordingly. If it be less a credit should be noted and the total figures for the year amended accordingly. The next question which 'arises from this is: should any alteration be made to the average figures for the second and subsequent years? The answer depends on 550 conditions. On general grounds I would say that it is safer not to make any alteration, but to continue in the same way and make another correction at the end of the second year.
At least, in following this course, the owner is playing for safety. If he thinks he would like to alter the average figure because his actual costs have been so much less than. the airerage, he should ask himself these questions.
Does he really believe that he will be able to continue, throughout the life ofhis vehicle, spending no more on its maintenance than has been the case during the year? Has it been overhauled? If not, is it not about time that it was overhauled? How much will that overhaul cost and by how much will it increase the amount spent in maintenance during the ensuing year? Is the condition of the vehicle all that it. should be in respect of lubrication, adjustment and cleanliness?
Are some new brake facings likely to be needed soon? Are the cylinders to be rebored? Would it not do him more credit, as an advertisement for his business, if the vehicle were polished a little more often, even at the expense of either paying the driver extra for overtime spent on that work or having it done in a local garage? Would a coat of varnish be worth while, or maybe a repaint or, at least, should not the lettering be touched up?
And those mudguards which have been bent and straightened so many times—would not the vehicle look so much smarter for a new set or a new pair, as the case may be? These and other similar matters should be carefully considered connection with the question as to whether or not the average figure for maintenance be reasonable.: The outcome cannot be reckoned here. It is foithe individual to decide.
The question of the average figure for tyres is not so involved. A year's working will probably be sufficient to indicate what tyre wear is likely to be, although even there a marginal allowance must be made to account for the fact that as a vehicle wears it loses a certain amount of its wheel alignment, which defect may pass unnoticed sometimes for months and will nevertheless be reflected in the tyre cost during that period.
Another inquirer raises a point which is, perhaps, a little outside the scope of our present subject, because it does not affect the methods of keeping costs. He has, however, raisedit in this connection and it is therefore quite likely that the same thing is troubling the minds of other readers. He draws attention to the fact that in The Commercial Motor Tables of Operating Costs the driver's wage appears as a standing charge. He thinks it ought to be a running cost, in his case, at least, for he engages his drivers at day rates, putting them off when there is no work for them to do.
Treating Wages as a Running Cost.
The answer is, of course, that in his circumstances it is more nearly correct to regard wages as a running cost, and I am aware that he is not alone in holding the view he does. I should say that he ought to continue to treat that item as a running cost.
Actually, as the amounts paid in wages are each week entered in the operating-costs record book, it does not really matter whether they be regarded as standing charges or running costs.
Another similar point is brought forward by an inquirer w.ho states that he treats depreciation as a standing charge and lumps maintenance and tyre expenditure in connection with his fleet as establishment costs. His object, he tells me, is to reduce the calculating of charges to a minimum. By putting depreciation as a standing charge and including maintenance and tyre costs amongst his establishment figures he arrives at a steady weekly debit, comprising establish ment costs and standing charges, which is easily calculated to show a cost per day per vehicle.
On to that he needs add only the running cost for petrol and oil, the figures for which are well known to him in connectien with each of his vehicles, to arrive at a total,so that the calculation of the cost of any particular job is facilitated. The principle is not unknown to my readers, although I have never carried it so far as this. I may, perhaps, explain it better by example.
Depreciation as a Standing Charge.
Assume that as the outcome of this method of accountancy this inquirer obtains a figure of £11 per week for the total of establishment costs and standard charges; then he can regard £2 per day as the cost of operation, irrespective of his mileage, for which, according to his figures for consumption, he is put to an expense of 3d. per mile. If now he be asked to quote for a run to Birmingham and back, 240 miles, say, and he knows that the time involved, owing to delays in loading and unloading, will be a full two days, the actual cost to him is £4 for the two days, plus /3 for the mileage, making £7 in all, and to earn a profit of £1 on that job he must charge £8. That is equivalent to 32s. per ton for a one-way load.
Now from some points of view this man's system of accountancy is quite all right. At least he is keeping accurate and complete accounts, which is, as I have so often emphasized, the main point. It is, however, open to this criticism: that he has no check upon the maintenance and tyre cost of individual vehicles, and I regard that as most essential to economical working.
Figures for garage rent should be those actually incurred. This is in answer to yet another inquirer, who states that he is paying only £13 per year for garaging three vehicles, which, he points out, is much less than I estimate.
The same reader tells me he is paying only £20 tax on each of his 30-cwt. vehicles, whereas The Commercial Motor Tables of Operating Costs show £25. There, again, it is the actual figures that matter and not the printed ones. What that means is he is operating those lighter types of 30-cwt. vehicle which come within the limit of the £20 tax.
Always keep in mind the fact that the Tables are printed for guidance. They are not meant to take the place of actual cost records and are not in any way to be regarded as hard-and-fast statements of what a vehicle ought to cost.
Finally, I would emphasize that whilst there is no need for disturbing existing systems of accountancy there is every necessity of checking those systems to make sure that they are complete records of expenditure, and I would again emphasize that it is preferable to keep separate records of individual vehicles, for only in that way can performance be checked. S.T.R. n51