"Breakeaen-Point Control fo, Optirnurn Profit"

(Editor's Note: The f ollozuing speech, which was delivered. by Dealer Kranz at a receni Retail Lumber Dealers Conference of the Southern California Retail Lumber Association in, the El Mirador hotel, Palm Springs, Calif ., has such. zuide interest to all dealers that it is heing reprinted here for wid.er circulation. )

I have been asked to speak to yon on the way Golden State Lumber Company uses the "breakeven point" charts.

I am honored that Orrie Hamilton has asked me to speak to you on the breakeven-point control as used at Golden State Lumber Company. At the same time, I feel hurnble since I am speaking to a group representing many years'

By Frederick H. KRANZ Monoger,

Golden Stole Lumber Co. Sonlq Monicq, Cqliforniq

experience in the lumber business. I have not seen the many business cycles that have occurred since 1921 'n'hen my grandfather established Golden State Lumber Company. After completing college I serr-ed in the Air Corps in World War II and later served in the Air Force in the Korean War. Bet'n'een and after u'ars I have had the pleasure of rvorking with my uncle, Frank G. Kranz. rvhom I consider one of the most progressive lumbermen in the field. I believe this because, though very successful and having a vast experience, he is always on the alert for nerv methods of optimizing the company's profits. To'uvards this end he has encouraged me to work on the ne\\rer statistical control methods.

Breakeven-point control is not new, but is a most convenient, precise, analytical tool to pr€sent revision of past costs and sales into future cost and sales. Breakeven point is a term used often in business, but defined as that volume necessary to pay all expenses, but show no profit or loss.

The first breakeven point which I rvill talk about is used as a guide to volume control and is based uporr price structure and expense history. In this the breake.r'en point is defined as that volume necessary to pay expenses, assrlming markup the same as the company has experienced rvith that specific volume. If expenses varied directly u'ith volume, running any business would be easy. There u,ould be profit from the first sale.

The profit at ar-ry volume is the difference between expenses and gross. If expenses were constant and fixed, cost control would be easy.

Since a company has both standby expenses and variable (Continued on Page 73)

E. A. Goodrich

E. A. ("Dooley") Goodrich, one of the most popular men who ever followed the lumber business in Southern California, died August 2 at his home in Alhambra. He had devoted his entire life to the industry and retired several years ago.

His lumber experience began in Wisconsin. Mr. Goodrich followed the westward trek of the inclustry to Montana, then opened up sales territory for the Wm. Musser Lumber & Mfg. Co. and other local lumbermen and coast manufacturers in Spokane and

0lltuanaet,

the Inland Empire. After marrying the daughter of a pioneer who founded Coeur d'Alene, Idaho, Mr. Goodrich went to Southern California, where he was variously a salesman for some time for the E. K. Wood Lumber Co., southern manager for the Union Lumber Co. aboat 20 years, and a salesman for Holmes Eureka Lumber Co. His last connection was as owner of a retail business, the Goodrich Lumber Company in East Los Angeles,