CHAPTER XXIXDEPARTMENTAL ACCOUNTING
Departmental Accounting — Expense Accounts — Departments — Purchases — Inventories — Store Accounts — Labor Charged to Departments and Sub-Divisions — General Principles.
Departmental Accounting — Expense Accounts — Departments — Purchases — Inventories — Store Accounts — Labor Charged to Departments and Sub-Divisions — General Principles.
—The large packing houses are usually operated on a departmental basis, so that monthly or yearly, a balance can be drawn off showing the profit and loss of each department. There is a great advantage in handling a large business in this manner, for it is probable that while in the aggregate the house is making money, there might be departments that are losing money continuously without being detected unless each one is put on an individual basis.
Each department is made a separate business carrying its proportion of the divisible expenses, buying the raw product and supplies going into the manufacture and receiving credit for all sales effected in the same manner as if owned by an individual and the business conducted at some remote point. The raw material transferred from one department to another is charged. At the end of each period, or weekly, those in charge, put a price on all the different products transferred from one department to another, generally using the market price which could be obtained if sold outside.
This method of analysis frequently shows that the department has lost money. It may develop that some other manufacturer has developed a field wherein he can pay a price for the raw product in excess of its value as used in the department and that it should be sold for cash rather than to use it for manufacturing purposes.
—There are a number of expense accounts that are borne upon an allocation, that is, apportioned among several departments, perhaps by percentage of sales, units in use, tonnage or other means devised by the ingenuity of the accountant, all with a view to an equitable division. These embrace, for example, Steam-Expense, which, as its name implies, is the cost of producing steam subdivided into four general uses,—cooking, power, lighting and refrigerating. Each made up of all items going into its cost. This provides a total of four items.
Administrative or Executive Expenses embrace the cost of office, telegraph, telephone, stationery, printing, advertising, insurance, interest and all other items of general expense. There are also some general plant expenses that are itemized for other purposes that may be included in this ledger account, or divided upon some basis and charged to the departmental ledger account.
—The parent products are cattle, sheep and hogs. These are subdivided into accounts about as follows:
Where one subdivision, such as Tongue, embraces several kinds of products, like sheep, beef and pork, it is operated as one department and not further sub-divided. Usually the outside departments are separated so that the departmental results are ascertainable. The divisions are carried on indefinitely depending upon the size of the business.
—All purchases of every nature that can be charged directly so are distributed from purchase vouchers. The departmental manager and foreman have a direct interest in these and usually look out for all supplies and like expense items.
—An actual physical inventory is taken at the terminating date of each month or period, making a record of the items of every nature on hand that is a liquid asset and not usually including interests which are charged off as an item of expense.
—To avoid duplication of purchases of material used, it is usual to have a general store in which these are carried and dispersed to operating departments on order. This store account usually includes the distribution of mechanical labor, such as pipe fitters, carpenters, machinists and labor of similar classes, being charged out to the department requiring their services.
—Plant labor is a large item of the expense of manufacture and one that is controllable within measure by the management. There are certain standards of divisions recognized by practice and for such departments if the business be large it is well to have a weekly analysis and a cost per unit developed. For a lesser business, monthly will serve. This expense item keeps the departmental men on the alert and serve as a basis of distribution of labor for departmental ledger purposes.
A system of labor classification is as follows:
(1)Cattle Yards.—All labor in the care of cattle from arrival at plant, and delivering into knocking pens.
Includes expense items of caring for cattle, cleaning pens, troughs, feeding and driving.
(2)Cattle Killing.—All labor on handling cattle from pens and delivering dressed beef to coolers.
Includes all labor expense beginning with knocking cattle and all items of labor involved in the dressing of cattle and all the disposal of parts, as follows:
Hidesdropped on floor ready for inspection.
Beefcompletely dressed, washed, weighed and delivered in the cooler department.
Casings, the gut sets delivered on floor ready for collection or passed to chute.
Tallow fatspulled from animal ready for disposal by rough tallow gang.
Heads and feetdelivered on floor ready for picking up by rough tallow gang.
Bloodpassing to reservoir ready for pumping or flowing to fertilizer department.
The killing of cattle cost shall include all labor for washing premises, grinding choppers, filing saws, or mechanic in charge of machinery and equipment other than breakdowns or repairs.
(3)Rough Tallow Department.—Heads, taken from Killing Department, delivery constituting separation from the animal. Perform all labor of separating heads into various parts and delivery to the receiving department of fats, horns, meats, bones, tongues, all meat parts, washed and in proper merchantable or manufacturing condition.
Feet, the picking up of feet and deliver to bone department.
Casing, the delivery of the gut sets to the casing department upon the bench where the casings are cleaned and removed.
Fats, the collection of all fats from killing floor, casing department or where produced and the delivery to the oleo oil or tallow departments.
Paunches, etc., the opening, cleaning and disposal of paunches, reeds, tripe in all their parts.
Plucks, the collection of the heart, liver, lungs and the separation into fats, refuse or meats and the disposal of the parts.
(4)Coolers.—Include expense of chilling beef in chill rooms, spreading for chilling, receiving, chilling and caring for small meats and the labor of packing and shipping to manufacturing departments.
Includes sorting, tagging and loading in cases or on wagons or delivery to cutting department.
(5)Casing Department.—The expense of removing casing from the entrails and the complete manufacture of rounds, middles, bungs, weasands and bladders whether salted or blown or dried. Complete manufacture includes all work up to and placing in packages and shipping.
(6)Hides.—The labor involved in taking hides from floor where dropped, inspecting, fleshing, splitting ears, washing, dipping, draining, salting and curing. The taking up, packing, loading and delivery to car, conveyance for shipment.
(7)Bone Department.—Includes all labor in manufacturing bone products such as horns, hoofs, manufacturing, bone grinding, bone and neatsfoot oils. The collecting and drying of pizzles and sinews, manufacture includes the packing and shipping of all products.
Per ton handled. Sum of weight received and weight shipped.
(8)Oleo Department.—The expense for manipulating raw fat to make oil, stearin, tierce, pack and ship. Fat is considered as delivered to oleo department when placed in chilling or washing vats. Includes cooperage work occurring in oleo department. The skimming of all catch basins connected with and a part of the oleo department.
(9)Tallow.—Labor for inspecting, products, filling tanks, cooking, pressing and all other work involved in making tallow or grease. Tallow to be tierced for shipment includes all labor for skimming catch basins and collecting the fats.
(10)Fertilizer Department.—The collection of tank water and the care including evaporation and returning of skimmed grease to rendering department. The drying, storing, grinding, packing and shipping of tankage. The collection, cooking, pressing, drying, screening, bagging and shipping of blood.
(11)Hog Killing.—All expense involved in dressing pigs from their receipt in yards to delivery in chill rooms. Including any attention in pens, cleaning pens.
The dressing of pigs completely, including the disposal and disposition of all offal and the delivery of separated offal to rendering tanks or to chill rooms. Include all labor, cleaning department, utensils and equipment. At times this department is separated into a dressing department which performs all labor incidental to dressing the hog, all labor on the heads and entrails being separated into another item.
(12)Hog Cutting.—To begin with the receipt of pigs at cooler. To cut pigs into various parts and dispose of said parts. Sausage department, lard refinery, rendering departmentor to curing cellars. Includes packing of any and all cut meats for disposal for sale.
(13)Pork Trimming Room.—This department takes the fats as delivered to them by the hog cutting gang, performs the trimming and assorting of same, delivering the lean trimmings to the sausage or curing departments, and the bones or fat to the lard tanks.
(14)Curing Cellars.—The expense for curing, salting, boxing and packing meats, being all labor of every nature involved on the receipt from cutting department to its disposal, as a finished product.
Includes unloading supplies and boxes. Includes all overhauling and any labor involved in curing processes. This department is usually divided into sweet pickle and dry salt sections upon the basis of the meat handled by each—but operated entirely separate.
(15)Sausage Department.—Expense for manufacturing sausage in all its work from receipt of green meat to its saleable condition boxed, and shipped. Includes smoking, boiled ham, work. This department is at times divided into a manufacturing and shipping department, in which case the manufactured goods are delivered to the packing room.
(16)Lard Refining.—The expense for handling processing, manufacturing, packing and shipping lard, including all labor used on receipt and care for supplies.
(17)Smoke House.—The soaking, washing, scrubbing, smoking, inspecting, packing and shipping of all meats, care of houses and all supplies.
(18)Tripe and Pig Feet.—The receiving of raw tripe from the rough tallow gang, washed ready for use. The cleaning, curing, packing, shipping, pig feet as cut from ham or shoulder and their complete manufacture ready for shipment.
(19)Beef Curing.—This department takes products as delivered to it, curing and loading same or delivering to next department. The cleaning of ox lips is charged to this department. Also against tongue department for curing, packing and loading tongues.
(20)Sheep Killing.—To be the complete expense for dressing sheep from their receipt in the pens to delivery to chillrooms; including all occupations, necessary thereto except the disposal of sheep offal and sheep by meats.
(21)Sheep Tallow.—All labor on sheep other than that described in the preceding paragraph, including disposal to manufacturing departments of all parts and of all meats to the chill rooms. Involving all work on sheep offal other than sheep casing.
—The following items describe the intent of the instructions.
(22)Delivery.—Constituted by trucking the product into the department and unloading the trucks or in case mechanical means such as conveyors are provided for delivering from one department to another, delivery is constituted by placing in the conveyor leading to the department.
(23)Cleaning.—Each department is to keep clean the premises, utensils and equipment used by it in the operating or manufacture.
(24)Supplies.—Each department is to receive, unload, care for, and be responsible for all packages, such as wrappings, tins, boxes, bags, kits, barrels, tierces, or casks, used for filling with product produced in that department.
(25)Shipping or Loading.—The item of shipping or loading expense shall be borne by the respective producing departments, upon a pro rata basis.
(26)Returned Utensils.—Any department using a vehicle for the delivering of the product to another department shall take the vehicle, truck or car back to the originating department.
(27)Cleaning and Icing Cars.—This department includes all labor of cleaning and icing cars and hooking up same for beef loading. The cleaning of refrigerator boxes being done by this department, a transfer is made against the departments using same on the basis obtained from the relative number of boxes used in each department.
(28)Steam Expense.—The total labor, cost for taking coal from quantity store alongside boiler room, to and firing boilers and disposal of ash. Includes all boiler cleaning, conveyor attention and labor connected with pumps on water connectedwith the making of steam. Expense of transportation from ship not included. Expense per ton fuel burned.
(29)Power Expense.—All labor for engineers, engine watch, oilers, janitors, pumpmen, ammonia or brine piping tenders, electricians or other labor attendant to or used in the production of electrical power, refrigeration, water production on pumping of water or brine.
(30)Repair Department.—Machinery. In this item are to be included all expense for wages for machinists, blacksmiths, pipe fitters, tin smiths and workers in metal, performing work for repairs for operating departments.
(31)Carpentry.—In this item, shall be included wages for all carpenters or wood workers and their helpers used in performing work for repairs for operating departments.
(33)Laborers.—Under this class shall be included the wages of all employes other than those named in the two preceding sections for operating departments.
(34)Store Department.—In this item is to be included all labor employed in the stores department for disbursing and distributing and the accounts of the repair, carpentry, labor and kindred departments. Items not directly chargeable to operating departments.