and regarding a profit somewhere as a sufficient excuse or a positive
reason for making a loss elsewhere.

It is quite true that in big undertakings, where there are large
standing charges, and where the organization possesses some of the
characteristics of an integral whole, it is not easy to measure
accurately the specific costs which should be assigned to any
particular portion of the output. But this difficulty is one of the
most serious weaknesses of large undertakings; precise detailed
measurement is the great prophylactic of business efficiency, and,
where it is lacking the bacilli of waste will enter in and
multiply. So clearly is this recognized, that the development of large
scale business has led to the evolution of new methods of accountancy,
designed to make detailed mensuration possible. We have most of us
heard of them vaguely under such names as "comparative costings," but
too few of us appreciate their full significance. It is hardly too
much to say that the issue as to whether the size of the typical
business unit will continue to become larger and larger, or whether it
has already overshot the point of maximum efficiency will turn largely
upon the capacity of accountancy to supply large and complex
undertakings with more accurate instruments of detailed financial
measurement.


§4. _A Misinterpretation_. The price, then, of a commodity tends
roughly to equal its marginal cost of production; and this marginal
cost (in perfect symmetry with what we observed as regards marginal
utility), may be conceived as applying either to the marginal producer
or to the marginal output of any producer. In the former aspect it is
open to a misinterpretation, against which it will be well to guard.