GIFT OF ACCOUNTING SYSTEM for Corrugated Fibre Company Compiled by W. H. BOZELL CHICAGO, ILLINOIS Digitized by tine Internet Arciiive 1^, in 2008 with funding from m IVIicrosoft Corporation ittn7/www;:^rr.hi\/e.org/details/accountingsystenn00bozerich ACCOUNTING SYSTEM for Corrugated Fibre Company By W. H. BOZELL March 9, 1916 Copyright, 1916, by Corrugated Fibre Co ■hul.^ <9^ Cost Chai^ A CoPQVGATrD Pi5pr Co. Paptd SlLICATf Tapt Imic TVVINC WD A PG PAPrf SVa PLCS VVipr r-rc Frc. PpoDucTivr/ L A &of? C0(?Q<.^04TIWG Poooui Lab lor? -ACTCi Pa V Doll Salts -PowFpLHtW .NiowPpoDUeoR Pep. 5lo^ v^r^.^KjiiE' L COMMI^-JJON ^SALAptr-S Orrtcr Zxp TrL e^TcL. xl^rcPE^T 5aV/4 CCOfMTS Dl-arOUMT^ Mi^crL.S. Fxp. ^4dvcptisim<^ ^^aL-i-. S&iL^y^s ToAv^rxp. W. H.e^ozrLL INTRODUCTION Cost accounting and cost finding in the corrugated paper industry, as in all manufac- turing plants, should conform very closely to the method of manufacture, if satisfactory results are to be obtained. The manufacture of corrugated fibre products falls naturally into two divisions. First. The manufacture of corrugated board, either single or double faced. Second. The manufacture of the boxes or other products from the board. 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 com- paratively 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 cost of corrugated products in common with other manufactured materials is made up of material, labor and expense. 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 and indispensable if correct results are to be obtained. 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. The accounting system which is outlined in the following pages is intended to show as concisely as possible the method of accounting which should be used in order to properly segregate and distribute the expenses and arrive at correct overhead percentages. .■=1 364867 I am subniittiug a list of the necessary accounts (Exhibit "AA") which shows the manner in 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. FIXED ASSETS AND LIABILITIES The accounts in this group are similar to those in general use by factories of this kind and, generally speaking, need no particular explanation. It will be noticed in this connection that in those factories where the corrugated business is a branch that the accounts in this group will be unnecessary, in which case the form of Trial Balance shown in Exhibit ' ' BB ' ' will be used. Reserve for Depreciation account should be credited at the end of each month with one-twelfth of the annual amount set aside for depreciation of buildings, machinery and equipment, at the same time debiting Depreciation expense account in the Factory Burden 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 for Depreciation. In arriving at Depreciation at least 10 per cent should be used for Machinery and Equipment and .'i to 4 per cent on Building. CURRENT ASSETS AND LIABILITIES The accounts in this group are the same as those ordinarily in use and will be handled in the usual manner. The Raw Materials accounts, that is the several accounts of Paper, Silicate of Soda, Tape and other raw materials are intended to include only such raw materials as can be figured directly into the cost of the finished product an% 17.12 Total Cost 154.09 Profit 15 91 Price, Net 170.00 15 EXHIBIT E MONTHLY PROFIT AND LOSS STATEMENT 1. Materials used 1.00 2. Labor, direct 1.00 3. Factory Burden 1.00 4. Factory Cost of Production 3.00 Add decrease in inventory of work in process, or .00 Deduct increase in inventory of work in process .00 5. Factory Cost of Sales 3.00 6. Selling Expense 1.00 7. Total Cost 4 00 8. Profit 1.00 9. Sales 5.00 Actual Factory Burden 4.00 Applied Factory Burden 3.00 Under Applied Burden 1.00 Actual Selling Expense 4.00 ' Applied Selling Expense 4.50 Over Applied Expense .50 Net Under Applied Expense (Loss) .50 Profit as above • 1.00 Net Profit for the Month .50 16 THIS BOOK IS DUE ON THE LAST DATE STAMPED BELOW AN INITIAL FINE OF 25 CENTS WILL BE ASSESSED FOR FAILURE TO RETURN THIS BOOK ON THE DATE DUE. THE PENALTY WILL INCREASE TO 50 CENTS ON THE FOURTH DAY AND TO $1.00 ON THE SEVENTH DAY OVERDUE. gOCT 24 1935 iH kA A n C^ in^Q 'm MAR O ly^" 'SPfi 13 Jfl^, «^H n ^S*'^ J LD 21-100m-7.'33 3 6 +^6 7 P2&Z UNIVERSITY OF CAUFORNIA UBRARY