AIM FOR THE TOP AT THE 2008 FBS USER CONFERENCE

When it comes to management information, are you still following the path of least resistance?  Then it's likely that you're neither achieving your management's nor system's potential and possibly working much harder than you need to.

There's still time to leave the rut and head for the high ground, accompanied by others with similar and complementary goals and experiences.  Join us for the 11^th Annual FBS User Conference, conveniently located at the intersections of Interstates 80 and 74 and the Mississippi River in Moline, Illinois.

Highlights this year include:

•	Preview of FBS's milestone upgrade and engine of commerce:  V8
•	Going the extra mile:  How to move beyond basic compliance to automated business processes and real-time decision support
•	Adding real value to management accounting
•	Farm management and accounting proficiency self-test
•	Distribution of free copies of the Farm Financial and Managerial Accounting Guidelines
•	Incorporating the budgeting-analysis-control process into your FBS software
•	Breakout sessions geared to your experience and interests
	•	"A-B-C's of FBS" for newcomers
	•	How to use Tableau Graphics with FBS data
	•	Demonstration of field-rugged laptops and supporting gear
	•	e.CLIPSE managerial accounting roundtable and technical issues
	•	Computer technology update
	•	"Real-time" web reporting from FBS data
	•	How users, accountants and consultants work together through hosted software
	•	Exploring Centerpoint Payroll software

We'll even slow the pace down for a relaxing evening of fine food and family entertainment at one of the Midwest's premier dinner theaters.

So take the high road to the picturesque Stony Creek Inn, August 20^th and 21^st.  Act now—the early registration discount ends on Friday, August 15.  Hotel rooms are going fast.  Click on the links for a downloadable brochure and registration form.

Stretch your understanding and capabilities through relevant classes and breakout sessions.
Experience and train on cutting-edge hardware and software technologies.
Dine, relax and network in an historic, professional dinner theater.

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Building and maintaining a budget involves much more than plugging dollars into spreadsheet cells.  Nearly every account involves a quantitative dimension.  For example labor costs are affected by hours, fuel by gallons and rent by acres or animal capacity.  Units (and associated unit prices) are essential for preparing a meaningful budget as well as documenting, monitoring and modifying an existing budget.

Monitoring/Control Process

Why bother with this extra detail?  Let's begin with one month's budget-to-actual report for the Diesel Fuel account.



If we compare the Actual Amount column with the Budget Amount column we discover that we are "over budget" by $2,025.25 in the Variance column.  However, more is going on than this total dollar variance.  The next two columns show that we actually paid $3.22 per gallon versus the $3.15 budgeted; creating a "purchasing variance" of $.07 per gallon.  The most significant difference, though, comes from the "volume variance" in Actual Quantity purchased—781—from the Budget Quantity—155.  The lesson here is that without units associated with accounting and budgeting entries you can't explain, let alone mange, variances between expected and actual results.

Unit/Price Adjustment Process

Units or price/unit should be adjusted under these situations:

1.	When building a budget from last year's actual account values and you expect units to vary significantly from last year. For example an expanding operation will likely require more quantities of labor, fuel, utilities and production facilities.
2.	When building from last year's account values and you expect unit price to vary significantly from last year.  (That pretty well describes nearly everything this year!)
3.	When revising a current budget to reflect expected or actual changes in quantities or unit price.

Requirements:  Don't Mix Apples and Oranges

Unit-based budgeting begins with a carefully-defined chart of accounts and consistent accounting practices.

1.	Set up a separate ledger account for each item that you need to monitor unique units and prices.  In the example above, separate accounts are used for diesel fuel, gasoline, and oil/lubricants because they typically have different costs per unit and are consumed at different rates.  You may also consider specific accounts for:
	•	Major classes of feed ingredients (corn, soybean meal, etc.)
	•	Common fertilizer compounds (Anhydrous Ammonia, Potash, etc)
	•	Seed by commodity (wheat, corn, soybean seed)
Don't go overboard by defining unique accounts for items like minor feed ingredients or specific herbicides unless you really intend to regularly monitor budget-actual unit/price variances at the account level.  Also remember that FBS feeding and crop modules track and monitor specific feed, drug, seed, chemical, fertilizer and fuel inventories.
2.	Record quantities consistently in accounting entries.  Account-level budget-to-actual unit monitoring won't make sense if you try to cram more than one unit of measure or use too wide of a unit price spread. For example, don't expect meaningful results if you combine electricity, propane and telephone in a single utilities account. Conversely, if there's a significant spread between farm and over-the-road diesel fuel unit costs, split these entries between accounts or centers.
3.	In order to automatically create a meaningful, unit-based budget from last year's accounting data, last year's records must be coded in the same format you'll be using this year.

Above is an example of dollars and units from the August, 2007, Diesel Fuel account "bucketed" into the 2008 budget by Division and Center.  (Centers are used here to distinguish between fuel tanks and clear/dyed diesel.)  If we expect the quantity and unit price to be identical to 2007, no other steps are required.  However, when the 2008 budget was created, diesel fuel was much higher than the $2.65 average in 2007 so the unit prices have already been adjusted once, resulting in a $10,659.33 projected Diesel Fuel Expense for August.  (See report Cash Flow report below.)



Unfortunately, diesel fuel has risen even higher than expected since the budget was created.  To adjust, drill down on the August Diesel Fuel cell in this statement.



Although you can manually edit either quantity or unit price, we're going to globally adjust all unit prices by 25% by clicking on the Unit Price column, then enter 25 (%) in the Adjust window.



The resulting change to the Cash Flow Statement is shown above.  This same global adjustment can be performed on the Quantity column as well.  These global changes can be made for an entire year by drilling on the Total column.

Next month we'll incorporate capital investments into our plan.

Note:  We'll be providing in-depth training on LifeCycle Budget at the FBS User Conference.

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SOFTWARE Q&A – WITH Q'S FROM YOU, OUR CLIENTS! Send us your questions/problems–be they short, long, simple or downright frustratin'!–about SeRVware and we'll handle them right "on the air" for the benefit of all. Q. What is the Current Tasks window on the main screen? A. The Current Tasks window on the upper left corner of the main FBS menu was new with version 7.6 (2004) and indicates which tasks are active (open) because these screens may be minimized or hidden.  •  To see which tasks are open, click on the Current Tasks button.  The data file (3 letter and year) are then displayed in the white box along with the program module.  •  To instantly go back to one of these tasks, left-click on the appropriate line in the Current Tasks window. It's a good idea to refresh this window before closing the program because occasionally a task window is left open (minimized) when the program is closed or the computer is shut down without closing the program and it remains minimized when the FBS program is reopened.  (All programs should be closed before turning off the computer.)  The most common symptom of this is not being able to enter check data, because the Add Check window was minimized when the program was closed or computer was turned off.  When this has happened, the input check window is immediately minimized when you click on the Add button.  The result may be several Add Input windows minimized at the bottom or behind the main program screen and a frustrated data entry person.  (This may also happen when trying to clear checks or run a report, if those tasks were open when the program was closed or the computer was shut down.)  To fix this problem you need to delete the FBS-LOC.INI file located in the program directory.  It is rebuilt when the program is reopened so that the minimized screen is normal size again.  Call FBS support (800-437-7636) if you need assistance. Top of Page CLIENT'S CORNER •   In The News Congratulations to Steve Cowser, Bradford, Illinois, who has been named Vice Chairman of the 1st Farm Credit Services Board of Directors. Jim Wirtz, Fern Valley Family Farms, Whitemore, Iowa describes a new venture into "welfare compassionate" pork in the article, "Experiment worth the risk for family hog farmers" in the July 2008 Iowa Pork Producers. Top of Page         sales@fbssystems.com 800.437.7638

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