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Show F FARM ACCOUNTING I i REVEALS LESSONS fx : - . Principles of Sound Business : Management That Apply V ; to All Farms ' 'J An analysis made of detailed rec-jfc rec-jfc ords kept by a group of Wisconsin :A( farms revealed several Important I Y lessons and the principles of sound Ijn ; business management derived from ;(yi . them apply equally well to other Vf farms, says an article Jn the Bulle-: Bulle-: tin of the Agricultural Commission T of the American Bankers Associa-:-NUT:J Hon. The article says: y "Investment costs. Including in- "7 V terest, depreciation, repairs, taxes and insurance, are approximately fi- two-thirds of all farm costs. Fur-3 Fur-3 thermore, these costs are largely ifu'- Independent of the production pro- gram of the farm, i f.- "This means that If a farmer cuts his production of crops or livestock, he Increases his investment costs V?V Per unit' of product produced, as a fjkj. smaller number of units must then , carry as large an expense load as 'Sj before. This illustrates the lmpor-I lmpor-I i tance, from the standpoint of costs, I. ; of operating a farm at or near ca-.i- . jaclty. "Investment mistakes are more i'fR? coBtly than many others because NUT;; they cannot easily be corrected. If farmer pays too much for his 5 SCi farm, his investment costs will be pA , abnormally high as long as he owns r 6 It If he constructs a $4,000 barn, W when 2'000 barn would have yM "rved his purpose, he will have ex-rj ex-rj cesslve barn costs, year after year, y&' during the entire service life of the v structure. "This emphasizes the Importance ot knowledge of 'nvestment values J o Is and the specific Investment require-k) require-k) meht of Individual farms. if tli D,erninin4 Real or False Economics gpy "In working for greater economy, .ii I " ' essential that the farm mana- Iff I' b8 abls t0 distinguish between Ju real and a false saving. This can be done only through a careful esti-mate esti-mate of the contribution to income, f. 0Ter period of time, of each Item I ot expenditure. Only if more U tn.ij' I laved in expense than will be lost in Income, can a contemplated cut in poiK expense be designated as a real pSitr; saving. y''""'i "Fr example, dropping dairy r(ffj herd Improvement work may result top!' ' ln yearly expense reduction. The Question to decide Is what effect the jC,i ... popping of this work will have on ;pl.'J;.- 'ne present and future Income from wv" the dairy herd. If the estimated loss ln "Testock receipts due to a low-m'"1' low-m'"1' ered efficiency In feeding and breed-ng breed-ng Is greater thai, the original sav-mg, sav-mg, then It would obviously be a y.f false economy." |