Find your cost of production

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There are many sources of information available that can offer guidance in the current cost of producing milk. However, these sources may have significant limitations because they use industry “standards” and not farm-specific financial data.

Specialists at Michigan State University have developed a simple spreadsheet that allows dairy farmers to use their farm’s financial data to estimate their cost of producing milk. This spreadsheet is primarily based on the data generated from the Schedule F used for federal income tax filing purposes.

However, dairy farmers and consultants can use data generated from the farm’s accounting system or a business analysis summary. Inputs to the spreadsheet include expense information for every expense category that appears on the Schedule F. Each expense and income category may also be adjusted if the user desires to allocate less than 100 percent of a specific expense to the cost of producing milk.

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C W Gray    
Twin Falls, ID  |  October, 03, 2011 at 10:42 AM

1) Only bu using a farms own financial records in a standardized format (to avoid missing important data) can you get at what an individual operations cost of production is. 2) Tax records (ie Sch F's) are based on tax management not business management. 3) In today's environment sound business records and financials including begining and end of year Balance sheets, accrual adjusted income statement, cash flow and statement of owner equity. In summary, you should know more about your financial situation than your lender or your CPA.

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