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Cost Records at a Glance
Page 98
Page 99
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Third and Concluding Article of a Short Series Describing a Method of Operating-cost Recording Used by a Successful Haulier THERE is still something that I would like to point out with reference to Fig. 2, the weekly summary of expenses which was published with the previous instalment of this series and is repeated this week, in concluding the previous article, I pointed out that one feature of this scheme of recording costs was typical of many systems, in that it was devised to a particular end and, therefore, as it stands, is not universally applicable to the needs of all hauliers. That, as I have already pointed out, is a difficulty in planning a system of accountancy which shall be adaptable to general needs.
The haulier who uses the system which I am describing obviously finds it most convenient for his purposes to know the total cost per mile of his vehicle. Actually, that information is valuable, no matter what may be the particular branch of haulage with which the operator may be concerned. It may not, however, be sufficient for the needs of everyone. Some hauliers find it more important to know the cost per hour.
The vast majority would prefer to have the information available in both of these ways. I am still convinced that the most allround practical method is to have the figures separately for time and mileage, so that a haulier can.total the cost for any job. To make this system universally applicable requires three more columns. There should be one following the total of standing charges, entitled "Cost Per Hour." There should he another following the total of running costs, headed "Running Cost Per Mile." There should be a final column entitled " Total Cost Per Hour."
• Referring to the actual example for which figures are quoted in Fig. 2, the amounts which should appear in these three columns are as follow :—First, forthe cost per hour under the heading "Standing Charges," the total of standing charges is £.8 4s. 6d. Now, in the daily report (Fig. 1), which appeared with the previous article, it is noted that the vehicle to which these records apply worked for 38Ahours per week. The cost per hour, so fax as the standing charges are concerned, is thus 4s. 34.-d., calculated to the nearest Id.
In the column "Running Cost Per Mile" there should appear an amount which can actually be calculated from the figures entered in Fig. 2, namely, the 25 6s. total running cost, and the 258 mites which are recorded as having been covered during the week. The cost per Mile is 4.93d.
cte With these two figures the haulage contractor can estimate for himself the total cost of any particular job, if he can provisionally estimate the total time to be taken and the mileage to be covered. Suppose, for example, some work is offered which involves collection from the docks, such as the haulage of timber. That may entail a considerable amount of waiting and the mileage is not likely to be considerable. Eight hours might well be spent and a total mileage of not more than 24 is likely. For that work the cost would be eight hours at 4s. :lid. per hour, which is 21 14s, 413., plus 24 miles at NG EXPENSES.
. Page 14. Paid—in Red.
4.93d. per mile, which is is. 10113. The total is thus £2 4s. 21d. Another day a job might arise involving t h e same time, namely, eight
hours, and a mileage of, say, 120. The cost would be £1 14s. 413. for time, as before, and 120 limes 4.93d., which is 22 Os. 3;14.; total, 24 3s. 'rid.
It is of interest from these figures to calculate the cost per mile and compare it with the figure of is. 0.613. per mile, which is the average derived from the summation of all the figures in Fig. 2. In the first case, when only 24 miles are covered in the day, the cost is 1s. 10.1d. per mile. In the second, the cost is only 8.36d. per mite.
There would, therefore, be a tendency for this particular haulier, in quoting for these two jobs and relying only upon his figure for cost per mile, considerably to under-quote for the low-mileage contract. In the other job, his price would most likely be too high and the work would pass to a competitor.
For the final additional column, that of "Total Cost Per Hour," all that is necessary is to divide the total cost of operation for the week, 213 10s. ed., by the total -number of hours, 381. The cost is just a fraction short of 7s. Old. per hour. This figure should interest those many readers who are in the habit of quoting for municipal haulage, and who are sometimes asked to accept as little as 5s., or occasionally 5s. 6d., per hour for the hire of a vehicle of this size. Be it noted that, whilst I am •aware that municipal haulage does not involve the mileage per week that is covered by this vehicle, yet, on the other hand, this total of just over Ts. per hour is only cost and embodies no provision for profiE.
I turn now to Figs. 3 and 4, which require little explanation. Fig. 3 provides for the entry of actual expenditure on such items as tyres, oil and maintenance, which are recorded only on the basis of estimates in Fig. 2. On this sheet, actual expenditure is recorded in red ink as it occurs (shown in black in the table). The amounts debited against the vehicle in Fig. 2 are credited in black ink on this sheet.
Alternatively, if the actual amount credited be not entered, it is shown as a deduction from the balance. For example, at the beginning of this year there was a debit of 449 2s. 10d. against lorry No. 6 in respect of tyres. During the week ending January 11 there was no further expenditure on tyres, but the vehicle covered a sufficient mileage, at the estimated rate per mile ot approximately 0.7d., to justify wiping off 15s. 44., thus reducing the debit, so far as that item is concerned, to 448 7s, 6d.
In a similar way, the debit on account of maintenance, standing on January 4 at 412 6s. 8d., was reduced by January 11 to £1.1 2s. 4d. In the week ended January 18, however, the engine of this vehicle was decarbonized at a cost of 42 12s. 6d., which would have brought the total to £.13 14s. 10d., but for a credit of 41 4s., owing to mileage covered, leaving the actual balance at 412 10s. 10d.
Fig. 4 is a record of work done during each week by all the vehicles concerned. It provides for the entry of the date when the work was done, date when invoice was sent, with a record of the name of the customer and the work done. A further column provides for the entry of the date when the money w.as received and there are columns for total cost, total received and net earnings. One of the advantages of this method of entry exemplified in Fig. 4 is that it is quite easy, on looking at the sheet and noting the blanks; to discover which of the accounts have not yet been settled.
S.T.R.