We must know the details of this matter, for what purpose the money was spent, and to what accounts it must be charged in order to obtain a control over these expenses which will be of value in our effort to reduce them to an economical basis. To obtain this detailed information we must go back to the origin of the various matters which occasioned the several items of expense.

We have men and machines. We must have buildings to house them and consequently land upon which to erect these buildings. These buildings must be lighted and heated. We must provide for the transportation of stock and materials. There must be an equipment for fire protection. These costs will all be subject to 5 per cent interest charge. Another 5 per cent for depreciation, and the cost of maintenance and fire insurance. Lighting and heating must be provided for in a similar manner, and subject to like charges, except insurance.

There will also be the wages of all non-productive employees, such as the shop superintendent and his office force, foremen, tool keepers, watchmen, sweepers, carpenters, engineers, firemen, inspectors, laborers, and all others who do not work directly on the product of the concern. The sum of all these items divided by the floor area in square feet will give us a factor called "floor rate," which we can use as one of the components in determining the rates for machines and men.

The cost of power will include the percentage on first cost of the equipment for that purpose and its installation; its depreciation; its maintenance and operating expense of labor, fuel, and supplies. From the horse power generated we obtain the cost of power per horse power hour. This is done by dividing the entire expense of generating power by the total horse power generated, say for a year, and dividing this by the working hours for a year, now assumed to be 2500.

We obtain an hourly rate for a machine by the use of the following factors, viz.: (a) 5 per cent interest and 5 per cent depreciation on its cost and the cost of its installation; (6) the cost of its maintenance; (c) the cost of insurance; (d) floor rate, calculated as the number of square feet actually occupied by it and the space necessary to handle the work to be done upon it; and (e) the cost of power, ascertaining the power required and using the cost per horse power hour.

In assessing the value of machines for the purpose of obtaining a machine rate, it is not necessary to assess them separately at their actual cost. The results may be obtained with sufficient accuracy by dividing them into classes, commencing with class A, including all machines costing less than \$500; class B, those costing from \$500 to \$1000; class C, \$1000 to \$1500; and so on. This method will not affect adversely the value of the results.

The man rate we obtain by (a) assessing pro rata to the men all the floor space not occupied by or assigned to the machines. While this varies widely in different shops, it is an important matter for two reasons. First, it costs as much, with the exception of the charge for power and repairs for an idle machine as for one working at its full capacity. Second, the idle machines are usually the larger and higher priced machines, and therefore the most necessary to look out for on the score of economy.

Each machine should be numbered in large, plain figures in some conspicuous place. The cost clerk should have a book in which he records the number, machine rate, and a record of its idle and running time. . The latter record he will obtain from the time cards, which should always give the machine number as well as the man number on every job done upon a machine. The idle machine record will be made up once a month, and the sum of the hourly rate of all idle machines during the month prorated over the entire number of machines, increasing their rates by the amounts thus ascertained for the following month.

In cases where the fluctuations in this account are slight, longer periods may be used, say three or six months. However, the prime object of this account is not so much to ascertain and account for the exact amount of the machine rate to the fraction of a cent per hour, although that is valuable so as to keep the record of idle machines for administrative purposes and as an indication of machine efficiency and shop discipline, in which capacity the information derived is of much use to the superintendent and factory manager.

By this method we shall frequently ascertain that there are machines in the shops that are adapted to some special work only, and that are idle for such a large portion of the time that they are extremely unprofitable, or that entail such a positive loss that they should be sold, or replaced by other machines better adapted for the work.

To carry this idea a little further and to effect still greater good results, the record of machines should be separated into an account for each department. This will bring the matter home to the head of the department. It will exhibit the relative machine efficiency of the different departments. If we can show a foreman that his machine rates, and hence his costs, are being materially increased by several machines being habitually idle, he will either get busy in finding profitable work for the machines or getting rid of them altogether.

Frequently a machine that is idle much of the time in one department may be transferred to another department where it may be profitably employed. This fact, being demonstrated, will be of value in bringing the foremen together in discussing these matters and the foreman who has more work of a certain kind than he has machines to do it with will be alert to find another foreman who has such a machine and not enough work to keep it occupied. An exchange will be effected that will be a saving in idle machine rates to one department and an increase in the machine capacity of the other, and consequently a matter of considerable value to the plant in a general way.

Usually such good results will be automatically brought about without the intervention of the superintendent or controlling authority. There will be the continual tendency to keep the foreman alert to a higher plane of machine efficiency for the entire plant.