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Farm Financial Standards Council Case Study
Finance & Accounting
Pages 4 (1004 words)
Farm Financial Standards Council Case Study Name of the Writer Name of the Institution Farm Financial Standards Council Case Study 1. Do you think that this case study with its proposed solutions will be useful to agricultural enterprises seeking to employ management accounting techniques?
Activity based costing on the basis of identified and mutually agreed activities and grouped under Production Cost Centers, Support Cost Centers and Profit Centers is definitely a more logical and inclusive approach as it traces the flow of all agricultural inputs and outputs. It is similar to process costing methods used in the manufacturing industries where the cost of every subsequent department is added to the previous ones and after elimination of waste products, we are left with the final cost of the finished products as they emerge from the last department into the finished goods inventory. For a farm the finished product would be the different crops produced. Although the first solution is more amenable to the situation at John and Mary’s Farm, the second is proposed as a better starting point for any type of agricultural enterprise. The benefits of the first solution are that it uses well regarded units such as acres for corn crop and bushels for soybean marketing which are logical and make very good sense (Case Study, pp 6-7). The reports generated in the first solution are also quite detailed and show quarter-wise production costs and expenses for each crop planted and reaped. ...
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