b' Wemaynowadjustthe10 profi "figuresbydeductingthemanagers \' tsalariesa$800permonthc ertainlyisnotexcessiveforthe$200 9 000 f irmoWhenweconsiderthatmanyofthelargerfirmshavemorethanone owner=managerthe$18~000~$24~000and$30.,000salariesarenotexcesr;;ive a Aftermanagers~sal ariesarepaidall"profits"havedisappearedfromthe $200 0 000classbuttheotherthreeclassesstill have$15\'!)787~$2St650and $31 ~875lefta Ifwefurtherassumeaninvestmentof$60~000(forequipmentand workingcapital)todo$200~000ofroofingbusinessandincreasethis amountinkeepingwiththepercentagesofsalesrevenuespentfor"De= preciationandRentEquipment"andthelargeramountofbusinessperformed wegetfiguresof$80 1 000 1$150 9 000~and$180 1 000,respectively,forthe remainingclassesoAt6%ret urnoninvestment~thecapitalusedinthe busines~eswouldearn$3 1 600 1$4 1 800,$9,000,and$10,800~respectivelyo Aft erdeductingtheseamountsthesmallestclassendsupwitha$3.600 lossandtheotherthreestill retainprofitsof$10,787,$16.650,and $21,0750 Ifwenowconverttheseamountsbacktopercentagesofnetprofits onsalesthesewouldamounttoalossof108% 1andprofitsof2o9%,2o2%, andlc7%oTherefore,every$1savedinanyofthecostitems,director indirectswouldbeequivalenttoadditionalsalesof$55 050,$34050,$45050 and$58080~respectively~foreachofthefourclassesoItdoesnotrequirea.greatdealofingenui tytofindprofitleaksinthecostsasana= lyzedinTableI.IoLosttimeinlabor,directorindirect~waste(includinglossesduetotheft)inmaterials,repairsduetocarelessuseof equipment,baddetbsandothersaForexample,ifmateriallossusually amountsto7%(aswasindicatedattheconvention)areductionofthis lossbyhalfwoulddoubl et heprofitofthelargestclassa Thecalculationsofoverheadonthreebasesaretabulatedatthe bottomofTableIILMuchconfusi onexistswithregardtohowoverhead shouldbedeterminedaAvaluablecontri butionwouldbemade,if, through conferenceandeducation~aconcensusonthismattercouldbereacheda AnefforttothisendwillbemadeattheconferenceinJanuary,l.965, attheNebraskaCenteroYourideasandsuggestionswillbeappreciateda TABLEI NATIO AVERAGES NAL & OfSALES DirectLabor IndirectLabor AdministrativeandDirectivePersonnel TOTAL=Labor32a79 Supplies=RawMaterials4 3097 TOTAL=LaoorandMaterial s76076'