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Aviation History
1960
1960 - 0204.PDF
204 FLIGHT, 12 February 196 BOAC Takes Care of the £s . of their system, the expenditure works out within one per centof budget, the situation can be regarded as reasonably satisfactory. This year (1959-60), for example, at the end of the seventhaccounting period, the corporation's budget was £152,000 on the right side on a total expenditure of about £60m—a variance ofabout one-quarter of one per cent. This takes into account an adverse variance in the budget of the chief engineer, whosedepartment was in the red, principally due to an epidemic of engine failures. Such an unexpected incidence of costs obviouslyhas a serious effect on the engineering budget. Even without a system of budgetary control a sudden big leap in costs could betraced to such an obvious cause. But budgetary control does enable its precise effect to be measured, and adjustments canbe made to the planned expenditure of that department in the accounting periods ahead. Here it is interesting to consider the BOAC engineering depart-ment's budget for engine overhaul costs. Supposing that an engine's approved ARB overhaul life is l,100hr, the departmentknows that in actual practice it can expect to achieve rather less —say l,000hr. Supposing also that the standard cost of overhaulis £1,000—i.e., £1 per hour per engine—this rate of charge is booked in each engine's log-book. Thus, if an engine fails pre-maturely and only £800 has been booked, the cost of that failure is £200. On the other side of the account, if the engine achievesits l,100hr there is a gain of £100, which goes into the reserve. Thus the cost of a sudden spate of failures will be revealed assoon as it occurs and will not have to wait to be revealed until the expensive engine overhaul programme has been completedsome weeks later. Wages, fuel and overhauls comprise the major part of anairline's expenditure—55 per cent in the case of BOAC last year. But to be controlled no less carefully are spares. Huge stocks ofthese have to be written off over the life of the aircraft concerned, and obsolescence costs are far greater than consumption costs.Thus the work involved in booking consumption costs can be unnecessarily laborious: the advantages of trying to control sparesconsumption, which is a purely technical matter (what accountant can say that a microswitch or new brakes should not have beenfitted in a particular case?) is much less important than controlling the investment in the stock and its obsolescence. The size of thestock is, of course, determined from past experience of spare-parts consumption. Allowance has to be made in any system of budgetary controlfor changing circumstances. It is for this reason that a distinction has to be made between fixed and variable expenditure. Variableexpenditure is defined by Mr Bevan as "what it does not cost if it does not fly." Fuel and oil are, of course, good examples ofvariable costs. Other items are not quite so easily distinguished. BOAC regard crew costs as fixed, even though when services arefor any reason discontinued, crew expenses (variable) are not incurred. The criterion here is that crews cannot be laid offby BOAC, as they might be laid off by other airlines. Examples of fixed costs are obsolescence, insurance, wages, premises, etc Having distinguished between fixed and variable costs it the:becomes possible to work out the cost of every single flight BOAC calculates a standard cost of operating every service, th:cost being split between variable and fixed costs. Having estab lished such standard costs, the planned number of round tripmultiplied by the appropriate standard costs should equal th budget. If a service is cancelled adjustment is made to allow fca distinction between fixed and variable costs, and the depart fments are let off their variable costs. Whenever Press reportrefer to a BOAC spokesman's estimate of how much a canceller service has cost (e.g., the suspended trans-Pacific service early i;1959), it is usually the fixed cost which is being quoted. If th. cost was greater than the revenue, it would be the lost revenuthat would be quoted. So much for the costing side of the equation. It is then necessary to produce, route by route, the overall result with revenue - taken into account. Every month each of BOAC's three routemanagers (eastern, western and southern) receives a statement showing actual adjusted costs incurred on his routes and the actualachieved revenues. Top management is presented each month with the overall cost-revenue picture made up of these threeseparate statements (which are, however, attached for top man- agement reference so that details can be gone into). This systemmakes it possible for each route manager to pinpoint and account for every variance in his particular route system. He knows thathe will be called to account at these meetings for any such variances. Every quarter top management receives a cumulative statement.This makes possible the discernment of broader trends, and the correction of malignant trends before they become too serious.Forgetting for a moment its purpose as a financial "howgozit," it is difficult not to admire this quarterly cumulative statement a^a work of art. All "budget" figures are typed in green, and "actual" results appear in black or red. The layout of the state-ment is designed so that the multiplicity of figures involved arc arranged in such a way that the trained eye can grasp the situation,detail by detail, almost at a glance. An interesting point to be noted is that for route comparisonsmail is evaluated at freight rates so as not to distort the true picture of the economics of each route. Some routes are rich inmail while others are not so well larded with this valuable com- modity. There is also the point that the amount of mail picked updepends to a large extent on chance and time. The budgeting of revenues is a much less exact science thanthe budgeting of costs. But BOAC's accounting people say they have "got it down to a fine art." The first step is for each stationto report on the potential market in its sphere of influence and to estimate its sales and revenue targets for the year ahead. Aswith costs, achieved versus budget figures are compared and accounted for. But as Mr Bevan points out, it is not the actualamounts involved that are so important. It is the extent to which they err on the wrong side of the line, and the reasons for thevariances, which are the essence of sound budgetary control. BLACKBURN FUTURE TN his first public speech as chairman of the Blackburn Group,•*• Arthur Jopling said at the recent Brough apprentices prize- giving in Hull: "We are convinced that the future of thecompany will be enhanced by our becoming an integral part of the very strong group which is now being formed. Our gatheringnext year will still be under the name of Blackburn and there is no intention of disturbing the existing organization." Mr Jopling presented the Robert Blackburn Memorial Prizes,and the merit awards were presented by W. J. Carron, president of the Amalgamated Engineering Union. The directors' prize—awristlet watch, which had been awarded to Peter Brattan as the best all-round craft apprentice—was presented by T. Bancroft,the works director. A. C. HARTLEY record with regret that Arthur Clifford Hartley, CBE, presi-dent of the Institution of Civil Engineering since last November and responsible largely for the Pluto undersea oilpipeline and—in the same year of the Second World War, 1942 —for the Fido fog dispersal system for airfields, died in a Londonhospital on January 28 at the age of 71. During the First World War he was a pilot in the RFC and theRAF, and also played a part in developing the Constantinesco synchronizing system for gun-firing mechanism. In the SecondWorld War he was lent by his company—the Anglo-Iranian—in 1940 for work on the development of a stabilized automatic bomb-sight. His work on Fido was carried out in 1942 when he was made Technical Director to the Petroleum Warfare Department.He was appointed CBE in 1944, and awarded the US medal of Freedom for his work on Fido. HIGH-SPEED CINEMATOGRAPHY FOR many years past the firm of John Hadland & Co, ofChipperfield, Herts (King's Langley 3669), has operated a high-speed cinematograph service, available to industry on adaily contract basis. During this period, they state, they have exposed well over a million feet of film and in the process haveaccumulated a great deal of experience, as a result of which they have been appointed agents for the leading manufacturers ofequipment used in this field. They are able to give advice on apparatus and techniques required to those about to employ high-speed cinematography for the first time. Widely used in aircraft and engine research work, the process is, of course, a well-established one—the analysis of high-speed motion by means of a slow-motion film. The film is exposed at many times faster thannormal speed but is projected at normal speed. The mechanism of an orthodox film camera limits film speed to about 200 framesper second, because of the limits imposed by the physical strength of the film; in high-speed cameras the film moves through the gateat a continuous speed and the image from the lens is passed through a rotating prism. Cameras of the prismatic type can covera range of from 160 to 16,000 frames/sec, and with projection at the normal speed of 16 frames/sec any degree of slow motionfrom x 10 to X 1,000 can be obtained. Cameras are available through John Hadland & Co for 8rnm,16mm and 35mm film sizes; some types have a second optical channel so that a simultaneous film record can be made from anoscilloscope. Normal projectors are usually employed, but the use of an analysis projector, giving facilities for still pictures or frame-by-frame progression, simplifies the process of analysis. For customers whose work does not justify the purchase^ ofequipment the company continue to operate their contract service.
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