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Determination of Costs 113 
methods in the way of cost reductions are not realized. 
As a rule, only two purposes are served by the traditional 
cost system. These two purposes are among the very 
least of those which can and should be served by a 
scientific cost system. They are as follows: (1) The 
traditional cost system gives the billing department some 
kind of basis for establishing prices on repair parts; 
(2) it also furnishes retrospective information to the 
superintendent when a job has apparently cost a great 
deal more than the same or a similar job cost ini 
to previous records. 
Another reason for inaccurate costs is that the work 
of cost-keeping is left to poorly paid clerks. The head 
of the cost department is usually burdened with so many 
duties and so much routine work that he has no oppor- 
tunity to plan or study. It is quite customary for a 
corporation with a business of a million dollars a year 
to have a thousand-dollar-a-year cost-department head, 
although the head accountant and purchasing agent are 
paid three times this salary. A company doing a business 
of a million dollars a year could unquestionably get far 
better results with a cost department consisting of a 
head at three thousand dollars, a first assistant at fifteen 
hundred dollars, and two clerks at a thousand dollars, 
making a total of sixty-five hundred dollars, than could 
be secured with a cost department in which the head is 
paid a thousand dollars, and having ten clerks at six 
hundred dollars each, making a total expenditure of 
seven thousand dollars. 
NEED oF Accurate Costs 
The need of accurate costs is thoroughly demonstrated 
when manufacturers of similar commodities, such as 
machine tool builders or furniture builders or shoe manu- 
  
  
  
  
  
  
  
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