Farm Management Software Blog

Does Margin Analysis Require Activity-Based Costing?

Posted by Norman Brown on Mon, May 28, 2012 @ 08:55 AM

Margins

"Let’s not make decisions based on isolated, arbitrary assumptions such as indirect cost allocations."

In his March 20112 Top Producer magazine column, Is Your Margin Analysis Lying to You?, CPA Paul Nieffer warns of the danger of comparing crop margins based on assumptions (i.e. dividing all machinery costs by all acres).  The solution is to employ Activity-Based Costing (ABC) through managerial accounting.  FBS offers this capability through our E.CLIPSE software and Nieffer's firm, CliftonLarsonAllen, provides consulting services for FBS clients.

We'd love to hear your thoughts, practices and questions in this area. 

Tags: farm management accounting, cost accounting, agricultural managerial accounting, Cost center allocation, activity-based costing, farm accountant, FBS Systems, CliftonLarsonAllen, Paul Nieffer