Efficiency Methods
An Introduction to Scientific Management

THE COSTING DEPARTMENT 45 for each individual machine, but still a percentage of the man’s wages. This is more accurate, but loses its validity if there is any possibility of working the machine at different times with workmen paid at different rates. During any period of dilution of labour the figures will have little value, and any wholesale change of rate of wages would also in- validate them. It may be asked whether the manufacturer can expect to gain very much from the more accurate knowledge of his costs, which, it is claimed, he will get by using efficiency methods. The expenses in the department for clerical work are almost sure to increase. Deplorable results of inaccurate costing have manifested themselves in the injury done to trade generally by the existence of firms who cannot estimate their costs properly—an injury very prominent in America, though less so in England. Under stress of keen competition, manufacturers lower their prices to the lowest possible tender, and it frequently happens that the estimate given by the firm is reduced to below the actual cost of the goods, though they are not aware of the fact. Ultimately, of course, this practice will lead the erring firm into liquidation, but that is a protracted process ; where- as the more immediate result of their action is loss and dismay among the competing firms whose methods of costing have been better, and estimates therefore higher. In America it has been pointed out by many writers that the rough averaging methods of costing and estimating are survivals of