STEADYING BUSINESS 
THE BUDGET 
The budget plays an important role in stabilizing business, 
as is shown in detail for various lines in the budget reports 
issued by the Policyholders’ Service Bureau. Properly worked 
out, it shows the cost of seasonal operation and brings home 
to the management, in cold figures, the extent to which over- 
head piles up, regardless of production. It shows the cost of 
labor turnover, of training new employees, and of lowered 
efficiency at times when unfinished work begins to run low. 
It also points the way for many remedies; how to anticipate 
sales for the necessary control of inventories, how best to 
correlate the operations of the various departments of a busi- 
ness, how to provide for all foreseeable contingencies, how to 
check results against expectations. 
More and more firms are making the budget a vital instru- 
ment of business control. A manufacturer of soap and cook- 
ing fats has succeeded in leveling the peaks and valleys in his 
business through the use of a budget. The sales department 
estimates its sales for a year, agreeing to sell the goods in the 
quantity estimated and for delivery in a steady flow throughout 
the year. This yearly sales budget is worked out from the 
detailed figures of sales supervisors. Each supervisor is in 
charge of ten or fifteen salesmen in a territory of about 200,000 
population, and knows what each salesman can sell to each 
outlet. In only one of the four years in which this plan has 
operated has the estimate been in error, and then the sales 
manager after six months asked to have the budget increased. 
The sales department furnishes the manufacturing depart- 
ment monthly estimates of sales by brands and sizes for the 
next month. The factory department sees that the raw ma- 
terials and supplies are on hand to take care of estimated orders. 
Orders, production and supplies are checked frequently against 
quotas. Workers are guaranteed steady employment. More 
effective use of the plant and equipment has come as a result 
of this plan. Ten per cent. more goods is packed during a 
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