Farm Management Software Blog

Farm Futures Identifies Benefits of Management Accounting

Posted by Norman Brown on Thu, Feb 23, 2012 @ 08:23 PM

Farm with clouds resized 600

You can count on the "Extra" edition of Farm Futures magazine to concentrate on relevant management topics.  The 2012 edition, Power Up Profits, contains two articles that dovetail nicely with the objectives of FBS Software.

The cover story, "Power up profits," drills into production and management strategies for a better bottom line.  In addition to a "big picture" view of projected costs from Illinois Farm Business Farm Management the story touches on how one Iowa operation allocates oil filters between corn and soybean enterprise.  While this sounds like a conscientious approach to tracking producton costs, it's a lot of unnecessary work that's not nearly as accurate and meaningful as activity-based management accounting.

Later in the magazine, Purdue Ag Economist Mike Boehlje answers how to evaluate the profitability of farm enterprises including crops, livestock, custom farming and trucking in "Zero in on profits."  According to Boehlje, to evaluate margins "you need to have accurate recordkeeping and accounting that properly allocates costs and income."

How far do you you go in splitting out enterprises?  Boehlje recommends aligning costs and profits with activities and managerial decisions. 

How should you track and allocate costs inside your operation?  Click on this link to receive the free white paper, "The A-B-Cs of Managerial Accounting."

Tags: managerial accounting, farm management accounting, cost accounting, agricultural managerial accounting, activity-based costing, Mike Boehlje, Purdue Ag Economist