RECORDS AND ACCOUNTS 405 



"opportunity cost" of the labor at these periods and charging it 

 against the crop using the labor at these times of non-competitive use, 

 the remainder of the net return to labor can all be accredited to the 

 labor during the period of competitive use. The crop which, by this 

 method, shows in the long run the highest return to labor during the 

 competitive period will prove the more profitable. 



While the above illustrations relating to what to produce deal 

 with crop selection, the problem of whether to sell or feed the feedable 

 products of the farm, and the problem of the kind of live stock to 

 keep, are equally important. The attention of a skilful accountant 

 is required to plan a system of records which will give basis for passing 

 judgment on these questions. 



131. A SYSTEM OF FARM COST ACCOUNTING 1 

 BY C. E. LADD 



The farmer wishes to know how much he is making or losing on 

 his business each year, how much he is making or losing on each crop 

 or class of animals, and how he can improve his business so as to make 

 more money. Cost accounting for the farm is the same sort of work 

 which the large meat-packing companies are doing to learn whether 

 they make a profit on canned goods, smoked meats, etc. The farmer 

 wishes to know whether his wheat pays and whether his cows or 

 orchard pay. These are some of the things which a set of farm cost 

 accounts will show. 



Many farmers are desirous of keeping accounts of this sort, but 

 do not know how to start. Undoubtedly, many are deterred frdm 

 starting because they believe that they do not know enough about 

 bookkeeping and because they have in mind no definite method of 

 procedure. To any such men who desire to keep accounts and who 

 have not worked out a system for themselves, it is believed that the 

 system outlined in this paper will be helpful. 



Farm cost accounting, of necessity, involves many estimates, but 

 there is no reason why one should lose faith or be discouraged because 

 of them. If the worker has reasonably good judgment and is not 

 prejudiced in favor of any crop or animal, he can obtain satisfactory 

 results. The systems of cost accounting in use by the large packing 

 companies and by large wholesale grocery houses involve as many 

 estimates and do not give any more accurate results than do well- 

 kept farmers' accounts. 



1 Adapted from Farmers' Bulletin 572. 



