COST ACCOUNTING 223 



counting, that a profit is not a profit unless it is produced 

 or calculated after all elements of cost and income have 

 been considered. One cannot truly say that he has made 

 a profit of $1000 on corn unless he has considered all ele- 

 ments of cost incurred in raising the crop, and all ele- 

 ments of income derived from its disposal. Labor of man 

 and horse is a cost of raising the corn. Contributions b~ 

 the corn to the upkeep of animals is a benefit derived from 

 the corn and should, therefore, be considered as income 

 from the corn. Corn account should be credited, in other 

 words, with the amount fed to livestock. The same prin- 

 ciples apply to other crops. 



Likewise, the several classes of livestock should be 

 charged with the value of crops consumed, before finding 

 the profit on them. In short, expenses in connection with 

 any branch of farming operations should include not only 

 cash expenditures, but all other costs arising from benefits 

 transferred from one department of the farm to another. 



Basis of Constructive Criticism. Analyzing (b) above, 

 the second reason for keeping cost records, there is one 

 point which stands out preeminent in the operation of a 

 cost system. It affords a basis for intelligent constructive 

 criticism. It forms the basis for judging the relative finan- 

 cial advantages derived from the conduct of the several 

 farming operations. A man usually engages in business 

 for the purpose of making a profit from it. The business 

 of farming is not considered as an exception to this rule. 



The farmer desires to make as much money as he can 

 from the time Tie puts in and the investment he has made. 

 A desire to make money is usually not sufficient. The de- 

 sire must be backed up by action. The action should be 

 directed along proper channels. The proper channels can 

 be determined very largely by an intelligent perusal and 

 interpretation of the accounts properly kept with the aid 

 of cost records. That is, the intelligent scrutiny of and 



