Using Cost Of Production For Decision Making

2169 words - 9 pages

Front cover
CASE STUDY
Using Cost of Production for Decision Making
"The Vegetable Industry Development Program is funded by HAL using the vegetable levy and matched funds from the Australian Government".
InnoVeg Horticulture Australia Limited

Content
Introduction 02
What is included in cost of production? 03
Calculating cost of production 04
Changing yield and costs 05
Using cost of production to make decisions 05
Should I harvest or cut my losses? 06
Should I grow a new crop? 08
Conclusion 08

2
Case Study
USING COST OF PRODUCTION FOR DECISION MAKING
Introduction
This case study shows how calculating cost of production can be used to help vegetable growers make decisions.
Knowing your cost of production can help when making
business decisions as it provides a quick way of relating
your cost of producing a product with the price you are
going to accept for the product. The cost of production
can be calculated for any unit of production - tonnes,
cases, bunches or the whole paddock. For some crops
you might calculate cost of production for more than one
unit. For example, it may be useful to know the cost of
production of capsicums per tonne and per case as you
may be selling different units of production.
The case study describes:
• What is included in cost of production
• How to calculate cost of production
• When cost of production can be useful and why you need to be careful using cost of production
• How a grower can use cost of production to make business decisions

3 Case Study Using Cost of Production for Decision Making
USING COST OF PRODUCTION FOR DECISION MAKING
What is included in cost of production?
It is very important to firstly think about what all of your costs are to grow a crop. It is useful to look at your financial records (refer to the case study, "How is our business going?") and take your total costs on the farm and ask yourself - how much of this was used for this crop? This way you are less likely to underestimate the costs. A simple calculator has been developed to help you calculate the cost of production. The first column includes your total farm costs, whilst the second column is for the costs for the particular crop you are looking at.
The costs that will be used in the calculation include:
Crop inputs
• Crop establishment - seedlings, soil preparation and amendments
• Growing costs - fertiliser, herbicides, water
• Fuel
• Labour - external
• Other costs
Post growing costs
• Harvesting - fuel and labour
• Packing
• Transport
• Other post growing costs
Overheads
• A share of overheads such as rates and accounting need to be included
• The appropriate share for each crop can be worked out on an area or gross value basis
• Many people like to do it on an area basis, as this is what they relate to and how some overheads, e.g.
rates, are calculated
• However, we favour doing it on a gross value basis, as this is a more accurate...

Find Another Essay On Using Cost of Production for Decision Making

Using the theory of consumer behavior, conduct critical analysis on the decision making process

3791 words - 15 pages discussed late.2. The distinct roles in the family decision-making processAs a case, one family intends to buy a station wagon of Toyota recently. Undoubtedly, the purchase activity will experience series decision-making process due to the automobile is valuable equipment for the family. In the light of Neal, Quester, and Hawkins, consumer decision making process of high-purchase involvement consists of five stages, namely, problem recognition

Law and Morality. Speaks of the dilemma of making a decision that someone must die in order for the others to survive. Explains and justifies the decision by using legal tools such as Law and Moralit

2117 words - 8 pages It is not an everyday occurrence that someone must decide the fate of another's life. The dilemma of making a decision that someone must die in order for the others to survive, can obviously be troubling. The process in which the termination of one's life may be easy to make, but to justify that decision is the most difficult one. This paper is given a situation in which a decision of taking one's life is essential. The situation is that a

Using Forecasting, Regression and Decision Making Analysis for Wal-Mart Opening New Department in St. Catharines, Canada

3216 words - 13 pages particularly on the viability of the first proposal, which suggest entering the food retailing market by Wal*Mart. Eventually, it will consider some proper techniques and theory which would be helpful for making a choice between the two alternatives.The viability of entering into the food marketIn this section, we will conduct a careful decision analysis of the first proposal. Above all, we will calculate the potential costs of taking an action to

a) Explain the term decision making using the rational method - education class - presentaion

2475 words - 10 pages cost constraints for example the administration might find it time and cost consuming to attended teachers problems because of focus on other things such solving curriculum problems for students. A decision making situation may involve multiple goals all of which cannot be maximised simultaneously. It is not possible to maximise goals when a suitable quantitative measure of progress is not available, this shows that it might not be possible to

hrm Equal opportunity policies can be seen as an attempt to eradicate consideration of social differences from organizational decision-making using bureaucratic means”

1243 words - 5 pages The primarily responsible for implementing and managing diversity and equality of opportunity in the workplace rests with-in the line managers or the line management of an organization."Equal opportunity policies can be seen as an attempt to eradicate consideration of social differences from organizational decision-making using bureaucratic means" (Liff, 1999)Legislation within the year 1970s, supported by the structure developments within the

Widget Production Paper provide , a cost-benefit matrix that compares the alternative, the effects the alternative will have on productivity, possible benefits of using a network strategy to...

1256 words - 5 pages discuss one of two options I chose as a solution for Taylor Inc. In order for Taylor Inc. to improve productivity and at the same time have a cost effective alternative, their best choice is alternative one. Although alternative one is not the cheapest one in the long run it is cost effective. Alternative one requires a capital investment of $1,300,000.00 which is $333,000.00 more expensive than alternative two but increases production to 392

Year 9 Health Response (Tobacco) Using the decision making model as a reference and guide address the following situation

1965 words - 8 pages Decision making model: You are with a group of close friends and they are trying to get you to try smoking tobacco, marijuana or drinking alcohol. They want to get together tomorrow and try it. In essay form, outline the process you would go through to make the decision as to whether you do or don't. Include all the facts and information you have accumulated in order to make an educated decision.In this situation, I am with a group of close

The Cost-of-Production Theory

796 words - 4 pages -production theory of value is the theory that the price of an object or condition is determined by the sum of the cost of the resources that went into making it. The cost can comprise any of the factors of production (including labor, capital, or land) and taxation. The resources that were used for construction of roads cannot be used for other activities. In fact, any resources used for the road construction are then no longer available for

Cost Savings Of Using a Virtual Assistant For Your Business

2020 words - 9 pages expertise and industry experience to offer their services. Therefore, whether you need a legal advisor for your firm or an expert on market research, they are all just a click away! Of course, there is always this traditional method of floating advertisements, inviting applications for the positions, conducting a selection process. But imagine the cost and time associated with the entire process. Not only must this new recruit be paid a fixed salary

Decision-Making Tools for Mangers

1281 words - 5 pages covers the sides of the situation that cost-benefit does not take in. Using both techniques together will ensure a well informed decision.In conclusion, our team has evaluated several different decision making tools that are found in our different organizations. Cost-benefit analysis, PMI analysis, grid analysis, SWOT analysis, and force field analysis are some of the techniques that we discussed. All of these tools have strengths and weaknesses

Business Research for Decision Making

1584 words - 6 pages Business Research for Decision Making The work of decision making involves choosing between issues that require attention, setting goals, designing suitable courses of action and choosing among several alternatives through the evaluation of each one of the alternatives. Of great importance in decision making is the choosing between the several alternatives. The effectiveness of this work of decision making is of great importance for the well

Similar Essays

Cost Information For Decision Making Essay

621 words - 2 pages units.Operating costing for company which has a mix production system that produces in large quantities but then is customized the finished product. Therefore, operating costing is a combination of process costing and job costing. However, it differs from job and process costing which includes more than two types of cost pools in overhead allocation process. The cost pools are designed to match the separate processes that may be allocated to batches of

Accounting For Decision Making: Type Of Cost Involved In Tamin's Fried Chicken Company

3380 words - 14 pages LEARNING ISSUES1. What are the costs that are involved in Tamin's business operations?2. What is Fixed Expenses?3. What is Variable Expenses?4. What is Semi-variable cost?5. What is Break-even volume?6. Why is it important for us to identify Break-even volume?7. What is Avoidable cost?8. How to calculate breakeven?9. What is opportunity cost?10. What type of cost that involve in decision making?11. What is CVP?12. What is unit contribution

Cost/Benefit Analysis Decision Making

878 words - 4 pages Cost/Benefit Analysis Decision-MakingWorking in a business for profit environment making decisions and more importantly making good solid decisions is not only required to be part of a team in a successful organization making goods decisions is a necessary part of the path to gaining respect, promotions and overall success in the organization.Cost versus benefit analysis is a decision-making model that is relative easy to use but at the same

The Creative Decision Making In A Documentary Production

2495 words - 10 pages This journal inspects the importance of creative decision making in various aspects of documentary production, examines whether those decisions help to make the film an engaging cinematic piece, and explores the influences it might have on the society, the cinema and the subject, in relation to my own experience in producing a 15min documentary film Hackney Pirates, and my understandings of relevant practice from the contemporary cinema