The Spiked Heel

“What do you think of that, eh?” Manelli said, smiling.

“Well…” Griff started.

“Joe,” McQuade interrupted, “was good enough to let me see the figures you submitted from your cost card, data for the past year. The figures showing cost without profit, cost with—”

“Yes, I know the ones you mean,” Griff said sourly, remembering the foolhardy job, and still resenting it.

“Very well,” McQuade said, ignoring Griff’s tone. “From those figures, by the simple process of long division, I was able to compute an average cost of any pair of shoes that leaves the factory.”

“Last year’s average cost, you mean,” Griff said.

“Yes, of course.” McQuade scratched his jaw. “It comes to seven dollars and twenty cents.”

“You realize—”

“Our selling price on a pair of shoes varies,” McQuade said. “Sometimes I find the factory making a ten per or even twelve per cent profit, which is well above the six per cent return we normally expect. In other cases, unfortunately, our profit barely comes to two and a half per cent.”

“I don’t understand what you’re driving at,” Griff said.

McQuade folded his hands patiently. “We have now established,” he said, “an average cost of seven twenty per pair. That means that every pair of shoes which went through this factory in the past year cost us exactly seven twenty to make.”

“That’s not true,” Griff said.

McQuade arched one eyebrow. “Oh, isn’t it?”

“No. In the first place, it’s an estimated cost. And in the second place, it’s not a true one. An alligator may have cost us, say, sixteen dollars to make and a sandal may have cost us… well, I don’t know, maybe two dollars… and another shoe may have cost us three dollars. If you add those costs and divide them by three, you’ll get an average cost of seven dollars, but it’s not a true cost.

“Seven dollars and twenty cents, to be specific,” McQuade said, “and no one is inquiring into the truth or fiction of the cost. We are labeling it average cost, and surely you are not disputing the fact that it is an average cost.”

“No,” Griff said, “but it’s still an est—”

“The point is this,” McQuade said. “Once having established an average cost, seven twenty in this instance, the factory could then add its six per cent profit, and it would even be possible to maintain an average selling price which—”

“You mean you’re going to sell an alligator pump for the same price you’re going to sell a sandal? Really, that’s—”

“I did not say that, Griff,” McQuade said. “We will add our six per cent profit to the average cost and then sell every shoe we make to the Sales Division, at an average selling price.”

“The Sales Division?”

“Yes. They will be billed for the shoes, which will remain in our stock room until delivery is called for. We will be paid for the shoes when they are billed. All on paper, of course.”

“I see. But—”

“After that, the Sales Division can put whatever goddam selling price they want to on a shoe. If they want to merchandise an alligator pump at ten cents, that’s their business. But at the end of the year, the factory will be showing a profit, and if Sales is showing a loss, they’d damn well better be ready to account for it.”

“Well,” Griff said, “that may sound all right, but—”

“You will admit that Sales is the logical place for a selling price to be established?”

“No.”

“You think Cost should establish the price?”

“Cost, in cooperation with Sales. Just the way we’ve been doing it.”

“I can’t agree with you. I’ve already sent a recommendation to Georgia, suggesting that Julien Kahn follow the procedure now being used in our other divisions.”

“It won’t work,” Griff said, shaking his head.

“Why not?”

“For several reasons. First of all, you’re dividing Sales from Factory. You can’t—”

“They should be divided.”

“No, they should not be,” Griff contradicted. “When Factory is slow, it’s Sales that comes through with permission to cut stock shoes. Why should Sales order stock shoes and then be penalized if they haven’t sold those shoes at the end of the year? Or penalized if they cut the price in order to merchandise them?”

“Factory is not going to be slow ever again,” McQuade said. “We are now cutting twenty-eight hundred pairs a day. We’ll be cutting three thousand soon. After that, who knows? There’ll always be plenty of work, believe me.”

“Except in slack seasons,” Griff said. “Besides, that’s not the most important thing.”

“What is?”

“Your figuring. It’s all wrong. You’ve taken yourself an average cost of seven dollars and twenty cents, based on last year’s pairage. You’ve just now said we’re already up to twenty-eight hundred, and soon we’ll be up to three thousand and maybe higher. Your cost is going to come down when we start making more shoes. It’s come down already.”

“Then we’ll adjust the average cost accordingly.”