COSTS OF SELLING
NEED OF ACCURATE SYSTEM
In a paper submitted to the Institute of Costs and Works Accountants, London, Mr. S. C. Tyrell comments on the reluctance of some firms to have a costing system in regard to distribution and selling of goods, although they admit the helpfulness of such 1 procedure in respect to production.' "Apart from the innate conservatism! which is so strong in the mature mindj usually found in control of an old-1 established business with tradition en-' twined with policy, there is a marked unwillingness to admit that any use can be made of a cost system for the selling and distributing. functions, even if it can be proved to be a practical method of cost finding," he states. 'What use to me,' exclaims the general manager, 'will it be to discover that my gross profit is subject to a number of charges representing operations which I well know are indispensable? How much better off shall I be if I can be told that individual lines or groups of lines are earning profits [which are greater or smaller than the I average figure shown by my present overall statistics?' he asks.
"The answer is simple and forcible. Knowledge is power, and no normal business man possessed of detailed knowledge of his selling expense incidence would, or in the long run could, refrain from utilising the information to the permanent benefit of the profit-earning capacity of the enterprise entrusted to his care.
"Further, it cannot surely be denied that an effective set-up of cost accounts covering the selling and distribution activities of the business must provide an insurance against the dislocation and disruption of thought consequent on unanticipated interruption of the tenure of office by the management personnel. Logicality and continuity of policy and administration can be more reasonably assured where basic information is available on standard lines, and where comparative costing oyer periods governed by ascertainable conditions is at the ■ disposal of the authorities. How often does the efficacy of present-day business policies depend on the mental storage of facts and expedience confined to the photographic brain cells of one man in an organisation! The picturesque imagery of the ancient East describes how the mantle of inspiration and power of the old Hebrew prophet fell upon the shoulders of his life-time assistant, but the mantle of the general or sales manager does not pass by way of the supernatural. It is the system of cost control in "the hands of the scientific but practical-minded cost accountant which should provide the ; materialism of the profits mantle where management is concerned..
"At the outset I think we should candidly admit that much of the reluctance to face the effects of cost .accounting in a field which is comparatively new to the majority of accountants is due to the enervating influence of the relative success attending the policy of laissez-faire (let things take their course).' One can almost suspect the age and calling of the student who, when asked to define laissez-faire, is reported to have punned it into 'lazyfare.' "
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Bibliographic details
Evening Post, Volume CXXV, Issue 152, 30 June 1938, Page 20
Word Count
512COSTS OF SELLING Evening Post, Volume CXXV, Issue 152, 30 June 1938, Page 20
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