the number of units of work produced and multiplying the result by the number of hours in a normal working day.

The contractor and the men supervising his work must have a knowledge of normal man-production. This requires technical training and experience in construction and is not an accounting problem. The accountant can assist in the installation of the system and in determining the man-production. Unless this analysis of man-production is reviewed and studied daily by someone with the necessary technical knowledge, the system still will furnish the contractor with the information for properly valuing prospective work, but it will not be effective in checking production losses.

Material Costs

The purchase register (Form 18, page 130) contains the record of the actual cost of materials delivered and its distribution to the subdivisions of work on which they were used. Materials not immediately installed are charged temporarily to a Stock account, an inventory account of unused materials on the job.

The items marked to be charged to subdivisions are posted direct to the ledger sheets for them. Material charged to Stock is posted in detail to a stock sheet having separate columns for each class of material. The total of all material charged to Stock account on the purchase register must agree with the total of "Material received during current period" on the stock sheet. Containers are not included with the cost of the material. The cost of cement bags, for illustration, is posted separately from the cement cost. Lost or damaged containers are ultimately charged to subdivisions.

The stock sheet is ruled in a series of panels and has a blank space at the side. Each panel consists of two columns, one for quantities and the other for money values. An inch space is provided at the head of each panel for inserting the

class of material, the vendor's name and the unit price of the material.

The following wording is printed on successive horizontal lines in the blank space at the side:

I. Inventory end of previous period.

2. Material received during current period.

3. Total.

4. Material used during current period.

5. Inventory end of current period.

Additional horizontal lines follow these five and are used for recording the quantity and value of material used during the period on each subdivision of the work. A separate line is given to each subdivision.

The charges against the subdivisions are based on reports of material used sent in by the jobs. These reports show the class of material, the unit of the material (cubic yards of sand, thousand (M) brick, barrels of cement, etc.), the number of units used on each feature of the work and the balance remaining on hand. The balance on hand at the end of the first period is carried forward to the report for the second period and the deliveries during the second period are added, the sum representing the total inventory to be accounted for. Columns are provided on the report for indicating the quantities of each class of material used on each feature of the work during the period covered by the report.

In writing the stock sheet, the number of units of each class of material used is credited to the total amount to be accounted for and charged to the proper feature of work, the symbol of the feature being noted in the blank space at the side. The quantities of each class of material are valued at the unit prices shown at the top of the panel. The money values are cross-footed to determine the charge to each subdivision for all materials used. The sum of all charges to all sub

divisions must equal the money value reported under "Material used during current period" in the summary. The amounts and quantities charged to each subdivision are posted in detail to the cost ledger sheet for that subdivision, quantities being entered in the columns at the left. These quantities are accumulated from the beginning to the end of the work. The total value of unused material on hand as given under "Inventory end of current period" is reported on the general cost statement in a space provided therefor.

The check on possible waste of material is developed not at the time that the costs of material are entered on the ledger, but when the cost statement is prepared.

Cost of Subcontracts

The information for the contract obligation to subcontractors is taken from the memorandum sheets referred to in Chapter XI. As the accounting department receives a subcontract or an order issued to a subcontractor, it enters it immediately on a set of these memorandum sheets for the job to which it applies. A copy is prepared for the cost analysis department and one for. the ledger-keeper in charge of subcontractors' accounts. The cost analysis department posts each contract and order issued to the subdivision each affects. This posting is shown in the column marked "Contracts Let" on the ledger sheet.

Applications for work performed are received from subcontractors from time to time and are entered on the purchase register. The amounts of these applications are posted on the cost ledger sheets in the column marked “Requisitions."

The cost ledger therefore shows the actual cost incurred to date for work actually performed by subcontractors and the amount of the contract obligation to them. The former figure is used in arriving at the total "Actual Cost to Date," which must be in agreement with the total cost appearing on the

general ledger of the accounting department. The amount of the contract obligation determines the gain or loss in subletting work, when compared with the amount allowed in the working estimate for the particular line of work covered by the subcontract.

Miscellaneous Costs

There are various miscellaneous costs in addition to labor, material, and subcontracts. They cover service charges, such as telephone, telegrams, hauling, insurance, permits, etc., which are charged to the feature of the work in which their estimated cost is included in the working estimate. Sometimes the charges for particular items are above normal and separate costs are kept. Postings are from purchase register.

If a commissary is maintained, or if the contractor has an operation requiring a garage or a stable, because of the large number of motor trucks and teams engaged, the cost analysis department should open an account for the cost of operation. The production of motor trucks and teams should be ascertained.

In view of the varied volume and character of the sales in a commissary, it is impossible more than to suggest some features of cost to be kept. The desirability of a greatly detailed analysis, or any analysis, depends upon the conditions attendant upon each particular operation. If the construction work is of such character as to require the housing and feeding of several hundred workmen, under difficult conditions, the cost analysis required is considerably greater than if only a small commissary operation is maintained for a limited number of workmen's noonday meals.

The major cost subdivisions on a large operation would

Cover:

I. The cost of the bunk-houses.

2. The cost of the commissary buildings.

3. The cost of utility buildings, such as amusement center, barber shop, tailor shop, etc.

4. Separate costs for equipment installed in the bunk-houses, in the utility buildings, and in the commissary.

5. Separate costs for the operation of the bunk-houses, the utility buildings, and the commissary.

6. An analyzed revenue, showing the receipts from the bunkhouses, from the utility buildings, and from the commissary meals.

7. When commissary stores are maintained and supplies sold to the workmen, the same analysis must be kept as in any merchandising venture, that is, amount of sales, the cost of goods sold, and the net profit or loss.

Cost of operation sometimes includes repairs and replacements of equipment, depreciation on equipment which will outlive the operation, and difference between cost of construction and salvage value of the buildings used. The cost of the buildings and the equipment is very frequently considered to be part of the cost of the construction work, rather than part of the cost of the commissary or bunk-house operation which is to be reimbursed to the contractor out of the amount paid by workmen for meals, etc. This is a matter of policy best decided by the ease or difficulty of obtaining and retaining workmen on an operation located at a distance from cities. This policy is also controlled by the limit upon the amount which can be charged workmen for meals, regardless of whether the amount so obtained reimburses the contractor for his outlay

or not.

Overhead Expenses

The overhead expenses of the field organization (superintendent, timekeeper, material checker, watchmen, civil engineer, etc.) and the field office, the supplies used therein and all expenses incident thereto, are usually charged to General Conditions.