Does Margin Analysis Require Activity-Based Costing?
Summary
Even if you hadn’t heard of the term before, odds are you’ve made this comparison for yourself countless times as a farm owner or operator. For example, when an accrual-based financial analysis isn’t reconciled with the farm’s P&L, there may be shortfalls in cash flow as costs arise before revenues do. This helps you get a solid estimate of how much net revenue you could expect to generate from your current list of cost driver activities. Farm ABC is impractical unless you have a means of: • Allowing multiple levels of allocation and responsibility centers to “roll up.” • Performing work in process and inventory adjustments as needed. FBS integrates data sources from your production process with your accounting to enhance traceability of costs, simplify ABC margin analysis, and create reports so you can track everything in real time.