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Determination of Costs 115 
prices. Accurate cost systems, however, will disclose 
which particular items are the ones on which the largest 
profits are possible, for naturally the trade in these items 
will be the trade which the sales department will wish 
to develop. At the same time, the most profitable items 
may not be the ones which are in greatest demand. From 
the standpoint of sales policy we must make the most 
desirable goods at as low prices as our competitors do, 
and preferably with some features which will make them 
more desirable than the competitors’ goods. The value 
of accurate costs has in the past been overlooked by many 
successful managers for the reason that in many cases 
success has been due more to fortuitous circumstances, 
such as natural advantages of location, transportation, 
and priority in the business, than to efficient business 
methods. 
Wastes DiscrLosep BY A CosT SYSTEM 
Comparative costs of the material and labor entering 
into the same item made at different times will reveal 
at all future times any overrunning of past averages. 
If these past averages have been supplemented by time- 
and-motion studies, and standard costs predetermined as 
a basis of current performances, it becomes possible to 
detect current wastes as they occur, instead of in a 
retrospective manner. A good system of classified stand- 
ing-expense orders closed monthly and compared month 
by month will show also any fluctuations in the classified 
expenses. The study of expenses thus brought about will 
result in the avoidance of wastes. 
Lower PropucTION Costs NECESSARY 
The entire history of manufacturing consists of a 
record of improved processes involving shorter times of