Cost Accounting for Coal Mines

Mr. Chairman and Gentlemen: Some of you men may know who are familiar with what we have been doing in the C. F. & I. the last three years, that we have revamped our entire method of cost accounting from the pit bosses' report through to the final report of the president. The basic ideas involved in our cost system are not ours. They were given us by one of the best management and industrial engineering concerns in the country-at least they have that reputation. All I can do now is to try to pass on to you some of the ideas we have from various sources and the methods we have used in teaching those ideas to our coal men on cost accounting. This will not be a technical paper. I tried to put it in language we could all understand, and I hope I will be talking the same language that you gentlemen talk when you think about the cost of your coal in your own mines. Accounting of all kinds is classed as overhead expense, and as overhead expense we must justify its cost by the service it gives the rest of the organization. That brings us up to the problem of making the cost department pay its own way, just the same as the power plant has to pay its own way, and we have gotten away from the old idea of cost accounting in that it is sufficient within itself. The cost sheets are only so good as they enable the operating man to reduce his costs. The cost sheets are only just so much work for the cost department, and if they do not help the operating man to control his costs, we figure that is so much work wasted. The cost department works for the operating department.