In this Issue:

Greetings!   

 This month we pay tribute to a dedicated farmer and loving father who could be very progressive, yet never aggressive. Pictured here on one of the first self-propelled combines in the county, he was an innovator and early adopter of technologies and practices in areas like corn driers, two-way radios, hog confinement, farm records and real-time market information.  He never stopped learning:  he attended Howard Doster's first Purdue Top Farmer Workshop, was a charter Pro Farmer, and hardly ever missed an episode of Ag PhD or Market-To-Market.  

Most importantly, though, Kenneth's chief end was to "glorify God and enjoy Him forever," and that is the lasting legacy he passed on to his five children, fifteen grandchildren, twenty-seven great grandchildren and here at FBS Systems. 

We're looking forward to crossing paths with you at one or more of our upcoming trade shows. 

Read about the benefits of management accounting in theMinnesota Farm Guide.   

Our Best Practices series describes how and when to useconsolidating centers. 

The Q&A column addresses the ominous-sounding "run time" error.  

For more background on accounting and recordkeeping topics please visit our blog site.  .

                                                                                      SDG

The genuine FBS trade show booth. Accept no substitutes.

We've had some great times visiting customers and friends so far this year during January and February trade shows.  Here's where we'll be "setting up camp" in the near future: 

March     1-3     Commodity Classic, Nashville, TN (Booth 623)

June        6-8    World Pork Expo, Des Moines, IA (Booth 735) 

Click here for venue location and booth number details.       

MINNEAPOLIS -- There are times when farmers require changes in their financial accounting systems.  

For some farmers, it's a wake up call. A farm -- worth several thousand dollars -- is suddenly a multi-million dollar operation. 

"They woke up one morning, and all of a sudden - it could have been land appreciation - but more likely, their sales are in the multi-millions, and they are still using the 'proverbial shoebox' to run their operation," said Norman Brown, president of FBS Systems. 

Click on this link to read the rest of this concise explanation of how farmers can implement and benefit from management accounting by MFG's Assistant Editor, Andrea Johnson.

Editor's note:  This article continues a new series on the "best practices" FBS users have developed to improve effectiveness, efficiency, internal control and compliance from their information system. 

When it comes to accounting, are you a "lumper" or a "splitter?"   

Lumpers get by with the minimum of detail in their chart of accounts and particularly their cost and profit centers. Data entry is quick and easy--just choose the "Miscellaneous" account and the "General Farm" center. As a result, though, it's difficult to retrieve any useful management detail or perform any meaningful analysis beyond entity-level financial reports. 

Splitters, conversely, exploit the full coding capabilities of their software to track the life history of every nut and bolt in their operation.   Unfortunately, they rarely successfully tie all these individual segments to the rest of their farm's products and activities so lack a comprehensive view of their business. 

The solution for both categories is to use "support centers" identified in the FBS world as Consolidating (N) Centers. Like service centers, covered in last month's article, consolidating centers can be used to capture expenses and revenues that are not directly attributable to a production, marketing or profit center. Consolidating centers, on the other hand, are much more versatile than service centers. For example:

• As the name implies, these centers can consolidate entries posted to multiple service centers. In other words, service centers can be allocated to consolidating centers (using annual percentages).
• Consolidating centers, in turn, can be allocated to production and marketing centers using "cost drivers" created by measurable activities within those centers.
• Ultimately, consolidating centers make "Activity-Based Costing" (ABC) possible and Management Accounting a powerful decision-support platform.

Here are some "best practice" consolidating center examples codes and explanations. 

Fxxx Livestock Facility Center (where "xxx" = code for a livestock production center). Used to record contract payments, rent, repairs, utilities, repairs, depreciation and labor associated with a livestock facilities (buildings and feed yards) that will later be automatically allocated to specific groups in that related production center. 

S___ Site Centers. The crop equivalent of livestock facility centers. Used to record rent, taxes, utilities and depreciation associated with a farm site that will later be automatically allocated to specific crop production projects. 

Cx___ Crop Operations Centers (where "x" = the code for specific operations, i.e. "P" for planting, "T" for tillage, "H" for harvest, "S" for spraying, etc. Used to consolidate equipment and labor costs related to these activities and allocate to specific crop production projects. 

AH___Animal Health Centers. Used to allocate drug and pharmaceutical costs to specific centers and groups without specific product inventories and application records. 

M____ Feed Mill Center. Used to accumulate utilities, repairs, fuel, depreciation and labor associated with feed grind, mix and delivery costs and automatically allocate to livestock groups. 

T___ Transporation/Trucking Centers. Used to consolidate individual truck costs and allocate to commodities. Truck consolidating centers are sometimes broken out by activity (inbound feed, truck from field, truck to market). 

Gx___ General Centers (where "x" = the subcode, i.e. "C" for Crops, "F" for Farm, "P" for Pork, "A" for Administrative. Used for expenses that can't be practically assigned to specific crops, production stages or sites. General Farm is only used for general production costs that can't be assigned anywhere else while General Administrative for office expenses. 

Figures 1 and 2 show consolidating centers in a cropping operation and pork operation flow chart. Note how service centers "feed into" the consolidating centers, which in turn are allocated to production, marketing or profit centers. 

Figure 1.  Crop Consolidating Centers.

Figure 2.  Pork Consolidating Centers.

Implementation Tips 

For lumpers: begin with a few major consolidating centers. Use service centers sparingly. 

For splitters: Add consolidating centers as "connectors" between existing service and production centers. 

Some features of consolidating centers (including a limited number of cost drivers) will function when TransAction Plus is integrated withCrop Audit and/or Smart Feeder. The full power of consolidating centers becomes available through E.CLIPSE management accounting.

Sarah Dixon, FBS Technical Services Manager.

Q.   I am getting a lot of run time errors when I try to run reports or  save entries. What is causing the issue and what should I do about it?