agMIS Important MA topics explained

First, let's define the accounting principle of 'dual control'; it isn't generally understood in agriculture. 'Dual control' prescribes that accounting responsibilities be sufficiently distributed such that no individual creates both the debit and credit side of any accounting entry or entries, particularly those involving liquid or movable assets. It's the very backbone of double-entry accounting.

Cost accounting's accounting purpose is to determine or define a basis (a) for the three accounting entries to record accrual or accrued accounting results, and/or (b) for establishing selling prices. Universally today, cost accounting is done via management accounting and MIS systems, and the farm that needs to engage itself in a dual-control mode, should also make sure its management accounting and MIS systems also adequately support dual-control requirements. That does not require, however, for any records to be entered twice.

In the cost example below, for example, the $24,433 of total soybean product costs may or may not have been dual-controlled in the accounting records when they were incurred, but need not effect internal allocations into per-acre and per-bushel breakouts.

                                       Corners          North40
                                      Soybeans         Soybeans
All Production Costs     Totals               DadsField          South40
                                               Soybeans         Soybeans
Seed Expense              4,000 15.6%     400    2,000     840      760
Herbicides                3,000 11.7%     300    1,500     630      570
Repairs                   4,200 16.4%     420    2,100     882      798
Fuel and Oil                600   2.3%      60      300     126      114
OperInterest                700   2.7%      70      350     147      133
Land Costs                4,033 15.7%     313    2,469     657      594
Unpaid Labor*             1,400   5.5%     140      700     294      266
Depreciation*             6,500 25.4%     650    3,250   1,365    1,235

Total Production Costs   24,433 95.3%   2,353   12,669   4,941    4,470

Total Acres, Head, etc.   200.0           20.0    100.0    42.0     38.0

Cash : $/Acre,Head,etc.   82.66          78.14    87.19   78.14    78.14
Total: $/Acre,Head,etc. 122.16         117.64   126.69 117.64   117.64

Total Units produced      10734            960     5500    2184     2090
Average Yield or Gain     53.67          48.00    55.00   52.00    55.00

Cost to produce 1 Unit    2.276          2.451    2.304   2.262    2.139

It's the management purposes of cost accounting that's of interest to farmers, and that information is most useful when expressed in unit cost terms. That involves two capabilities not common to 'accounting' programs. One is long division, the other is quantities and volumes to be used as denominators.

It's those quantities and volumes (and not the dollars and cents) that are always first and foremost in managers' minds, and a test of good management accounting and MIS systems and tools is how well they're designed to handle those quantities and volumes. Unit costs thus become free but timely by-products of good management.