Beyond your normal business level income and expense tracking within the Accounting section, you might also want to calculate the expenses and income for individual animals, plantings, grow locations, and equipment. How much did you spend on them, and how much income did they bring in? Were they profitable, or did you take a loss? Farmbrite's Breakeven Cost Analysis can help you figure out the bottom line to know if a certain field, animal group, crop, or piece of equipment is costing you more than it's making, or adding to your farm's profitability.
How This Differs From Standard Accounting Transactions (Profit and Loss)
You likely know that you can create income and expense transactions within the accounting section. These record the actual expenditures you have for your business, and the income you generate when someone pays you for your products and services. You'll generally record the expenses when you actually spend the funds; we are talking about when you swipe a card, write a check, or put down your cash to purchase something. If you went to the store and bought feed, medications, fertilizer, or equipment parts, you'll generally create an expense transactions for that date, vendor, and amount. What you bought then generally becomes part of your inventory for use around your operation. You've thus accounted for the money you spent by creating an expense transaction, but maybe you'd like to take that a step further and allocate the goods to specific animals, crops, or equipment to then realize the actual cost of production for that record.
As an example, think of buying a few thousand pounds of feed that will be distributed across multiple animals over time. That feed may have cost you a few hundred dollars on your ledger, but you might also want to know how much of it each animal ate so you can find a true cost of production on each record. You can add the value to your inventory item or lot, and when you feed your animals the cost of that feed will be associated with their Breakeven Cost Analysis without duplicating it's cost on your accounting ledger and financial reports.
Here are a few additional examples of how this might be useful in different scenarios.
- You purchased bulk medical or breeding supplies and now want to allocate individual doses to specific animals or livestock groups.
- You bought the fertilizer for your whole season in one transaction, and will now apply portions of it to specific fields and plantings as they grow over time.
- You got a great deal on spare parts for your truck, but will use them in services over months or years as you add hours and mileage to equipment.
- You used a piece of equipment in a field and want to see it's usage cost included in your field expenses.
What types of records is this available on?
The Breakeven Cost Analysis is shown on these record types and includes the following data:
- Individual Animals - The costs associated with the purchase or the animal, any treatments, feedings, breedings, inputs, and associated equipment usage costs, along with any expense or income transactions associated with the record.
- Livestock Groups - The same as above, but for all of the animals currently assigned to the group.
- Grow Locations - The costs associated with treatment records applied the location, or plantings within it, and associated equipment usage costs, along with any expense or income transactions associated with the location or plantings as well. This combines the field itself, and all the plantings within it.
- Individual Plantings - The costs associated with treatment records for the specific planting, along with any expense or income transactions associated with the planting as well.
- Crop Types - The costs associated with the treatment records for any plantings of a specific crop type, along with any expense or income transactions associated with the plantings as well. This combines all of the plantings for this crop type, but does not include any of the location specific costs.
- Equipment - The costs associated with the purchase of the equipment, plus any costs associated with maintenance records, along with any expense or income transactions associated with the equipment too.
What costs and income are included in the Breakeven Cost Analysis?
The costs associated with the following record types will be included in the Breakeven Cost Analysis:
- Purchase Cost (Livestock, Equipment)
- Treatment Costs (Livestock, Crops/Plantings/Locations)
- Feed Costs (Livestock)
- Input Costs (Livestock)
- Breeding Costs (Livestock)
- Equipment Costs ( Livestock, Locations)
- Maintenance Costs (Equipment)
- Other Expenses - All record types; these are any expense accounting transactions that are associated with the record.
- Revenue - All record types, these are any income accounting transactions associated with the record.
Viewing the Breakeven Cost Analysis on a Record
You can find the breakeven amount for any record by navigating to it's Accounting tab. Just access the record you are looking for, click Accounting, and you'll see it displayed at the top. You can expand and collapse the section to show additional details. The breakeven calculates based on all of the different factors outlined above, and will display as a negative number once you have made a profit on this record. You've "broke even" in that you income is greater than your expenses, and the amount shown is thus then shown as positive income. Note: The breakeven amount may take up to 15 minutes to reflect newly added income and expense transactions.
In our example below we examine the costs and income for our bison Rosalie. We originally paid $450 in purchase costs, and then $89 in treatments, $200 in feed cost (not counting her grazing, which she does a lot of!) $32 in other inputs, $239 in breeding costs, $6 in associated equipment usage costs, and $230 in other costs (her shipping to the auction). We sold her for $2650, giving us a total breakeven of -$1404.
Breakeven Cost Analysis Reporting
There are 4 reports available to find your breakeven amount on your records. These are all listed under the Accounting and Financial reporting tab in the Standard Reports section. You can also add the field "Breakeven Amount" to your custom reports as well.
- Livestock Cost Analysis
- Crop Type Cost Analysis
- Grow Location Cost Analysis
- Equipment Cost Analysis
Like the names imply, each one will show you a specific type of records. They outline all of the costs and revenue, and then show you a breakeven amount.
