Page 588 - Sensors and Control Systems in Manufacturing

Economic and Social Inter ests in the Workplace
• Customer groups. Sales costs and profits can be classified by 541
customer groups. This is especially valuable when a few cus-
tomers account for a large part of the sales.
• Industry. Analysis of sales, costs, and profits of sales to cer-
tain industries may be useful in planning efforts to sell to
growing industries.
• Geographical areas. The cost of shipping goods to faraway
customers may consume a large part of the gross or contribu-
tion margin. Analysis by areas can help the sales manager
assign salespeople where they can obtain the most profitable
results.
• Order size. Quantity discounts must be watched. Also, clas-
sification of sales, costs, and profits by order size may bring
out opportunities for new selling categories.
• Distribution channels. Classification of sales by distribution
channels—wholesalers, retailers, and retail customers—
may open up profit opportunities and areas for further
investigation.
• Combinations. Combinations of the analyses outlined in
items a, b, c, d, and e may give useful information. For example,
sales, costs, and profits classified by both order size and
geographical area might lead to the development of a new
selling strategy.
These costs and profitability analyses could absorb a great deal
of clerical time and perhaps cost more than they would be worth.
Management of each firm must decide for itself which ones are worth-
while for its operation. Electronic data processing can play an impor-
tant part. With proper programming, coding, and processing of the
data, a manufacturer can have a vast amount of information and have
it more promptly than by manual processing. The task is then that of
using the information to plan production and sales strategies.

11.3.7 Communication of Business Financial Status
The primary service of accumulating and analyzing cost-accounting
information is to have a sound basis for management decisions. But
the information is also important for financial reports and presenta-
tion to outsiders.
The financial reports most often issued to outsiders are the bal-
ance sheet and the income statement. These statements of financial
conditions and the results of operations are of interest to creditors
(bankers and suppliers) and to investors and prospective investors.
If the manufacturer takes government contracts, governmental
agencies will ask to audit the cost of production for various reasons—
renegotiation of prices, establishing cost-plus prices, and so on.