202301 Jun

Farm Accounting: What Is Opportunity Accounting?


If your plans involve changing or reallocating numerators (dollars) as well as denominators (acres, hours, machinery capacity) then you’ll be playing an Excel version of “Whack-A-Mole” as new costs pop up in one cell as you push expenses down in another. The hen house, milk cow, and moldboard-plowed corn-oats-meadow rotation have been replaced by fence row-to-fence row monoculture, site-specific management and concentrated animal feeding operations. Fortunately, American agriculture is constantly reinventing itself thanks to an endless parade of innovators probing the boundaries of production and efficiency and turning conventional wisdom on its head—often launching new ag tech trends. • Day labor hired specifically to harvest a vegetable crop is both variable and direct, but full-time farm employees informally allocated to various jobs are often treated as indirect costs. An alternative to internal growth is to allocate fixed costs to external services like custom farming, trucking or scouting, spreading overhead over more units and reducing production risks by diversifying.

Source: Fbssystems