Cost Accounting Steps Green&Bean&Production&Costs
Labor&Cost
Quantity
Unit
Cost&Per&Unit Total&Cost
Prep%Beds
0.2 Hrs
Spread%Amendments
0.1 Hrs
Seed
0.15 Hrs
Water
0.25 Hrs
Weed
2 Hrs
Total&Labor
Hours
$%%%%%%%%%%%%10.00
Input%Cost
Quantity
Unit
Cost&Per&Unit Total&Cost
Seed
2 Lbs
$%%%%%%%%%%%%10.00
Amendments
6 Lbs
$%%%%%%%%%%%%%%0.10
Total&Input
Machinary&Cost
Quantity
Unit
Cost&Per&Unit Total&Cost
Total&Machinery&Use
0.45 Hrs
$%%%%%%%%%%%%10.00
Total&Cost&Per&Bed
Quantity
Unit
Cost&Per&Unit Total&Cost
Yield&Per&Bed
120 Lbs
Steps to calculate the production cost per unit: 1. Track all the work (in total hours) that went into growing one bed of a crop. 2. Multiply by the hourly wage. 3. This is your labor cost per bed. 4. Track all the inputs that went into one bed. 5. Multiply by the costs associated with each input. 6. Add these together. 7. This is your total input cost per bed. 8. Track all the machinery hours that went into one bed. 9. Multiply by the machinery cost per hour. 10. This is your total machinery cost per bed. 11. Add together labor cost, input cost, machinery cost. 12. This is your total production cost per bed. 13. Divide by the yield (number of units) per bed. This is your production cost per unit. Green&Bean&Harvest&Costs
Labor&Cost
Quantity Unit
Cost&Per&Unit Total&Cost
Harvest
5 Hrs
$-----------10.00
Quantity Unit
Cost&Per&Unit Total&Cost
Quantity&Harvested
30 Lbs
Steps to calculate the harvest cost per unit: 1. Track the harvest labor hours and quantity harvested. 2. Multiply the harvest labor hours by the hourly rate. 3. This is your total harvest labor cost. 4. Divide by the number of units harvested. This is your harvest labor cost per unit. Labor&Cost
Phone&Calls&to&Chefs
Invoicing
Delivery
Bookkeeping
Total&Labor
Input&Cost
Wax&Boxes
Total&Input
Vehicle&Cost
Total&Channel&Sales
Green&Bean&Marketing&Costs
Quantity
Unit
Cost&Per&Unit
Total&Cost
0.2 Hrs
0.1 Hrs
0.5 Hrs
0.25 Hrs
1.05 Hours
$&&&&&&&&&&&&&&&&&10.00 $&&&&&&&&10.50
Quantity
Unit
Cost&Per&Unit
Total&Cost
5 Ea
$&&&&&&&&&&&&&&&&&&&0.75 $&&&&&&&&&&3.75
Quantity
Unit
3 Miles
$138.00
Cost&Per&Unit
Total&Cost
$&&&&&&&&&&&&&&&&&&&0.75 $&&&&&&&&&&2.25
Cost&Per&$/Sales Total&Cost
$&&&&&&&&16.50 Steps to calculate the marketing cost per unit: 1. Track marketing labor (in total hours) for a marketing channel for one week. 2. Multiply by the hourly wage. 3. This is your total marketing labor cost for this channel, for this week. 4. Track other marketing input costs for this channel, for this week. 5. Add these together. 6. This is your total marketing input cost for this channel, for this week. 7. Track all vehicle miles for this channel, for this week. 8. Multiply by the vehicle cost per mile. 9. Add together labor cost, input cost, vehicle cost. 10. This is your total marketing cost for this channel, for this week. 11. Divide by the total sales for this marketing channel, for this week. 12. This is your marketing cost per dollar of sales. 13. Multiply the cost per dollar of sales by the price of your crop. This is your marketing cost per unit. Item
Rent
Insurance
Phone
Conferences
Total
Total)Farm)Sales
Cost)Per)$/Sales
Farm)Overhead)Costs
Total)Cost
$+++++++++++++++++++++++++++++++++++++ 1,200.00
$++++++++++++++++++++++++++++++++++++++++ 960.00
$++++++++++++++++++++++++++++++++++++++++ 900.00
$++++++++++++++++++++++++++++++++++++++++ 400.00
$+++++++++++++++++++++++++++++++++++++ 3,460.00
$+++++++++++++++++++++++++++++++++++ 33,000.00
Steps to calculate the overhead cost per unit: 1. Track your overhead costs for your farm for a period of time (one season, ideally). 2. Total your overhead costs for this time period. 3. Divide total overhead costs by the total sales for the same period of time. 4. This is your overhead cost per dollar of sales. 5. Multiply the cost per dollar of sales by the price of your crop. This is your overhead cost per unit. Comparing Price to Cost Crop: Price Per Unit Unit minus Production Cost Per Unit Harvest Cost Per Unit Marketing Cost Dollar of Sales Overhead Cost Per Dollar of Sales equals Profit (Loss) ü
There are many different ways to allocate indirect costs and no “right” way. Experiment with different allocation bases and consider the impact of each of them on your assessment of the costs and profitability. Recommended References: Fearless Farm Finances: Farm Financial Management Demystified published by Midwest Organic and Sustainable Education Service 2012 The Organic Farmers Business Handbook by Richard Wiswall Growing For Market articles by Chris Blanchard o “Determine your labor costs and use the information wisely” May 2014 o “Identifying your biggest money-­‐making crops” January 2013 o “Setting-­‐prices-­‐for-­‐maximum-­‐profit” June/July 2012 Questions? Contact Us: http://centerforsmallfarms.oregonstate.edu/ Center for Small Farms & Community Food Systems 107 Crop Science Building, Oregon State University, Corvallis, OR 97331