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ACC501 MOD5 CASE5-Product Costing

ACC501 MOD5 CASE5-Product Costing - Farm Financial...

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Farm Financial Standards Council Model Case A Case Analysis ________________________ TUI University June 5, 2011 Farm Financial Standards Council Model Case A Case Analysis Case Background A managerial accounting system is being designed for the farm independently operated by John and Mary Farmer consisting of a total of 1,060 acres planted with corn and soybeans crop. There are several unique characteristics of the farm that makes designing an accounting system quite challenging. One of these characteristics is the co- ownership of a common line of machinery. This common line of machinery is co-owned by the Farmers and their son who operates an 80-acre crop land rented from John and Mary on a crop share basis (Farm Financial Standards Council, n.d.). John and Mary primarily produce corn and soybeans for the cash market rather than producing seed crops or other specialty crops. Though the farm is owned by both John and Mary, due to her daytime employment, Mary is not actively involved in the daily farm operations. Thus, John is the sole decision maker. John Farmer plans to retire within the next 5 to 7 years and desires to implement a more sound managerial accounting system for the farm before passing it to his son. One of the objectives is to provide data and analysis relative to the profitability of both the corn and soybeans crop individually. At the end of the day, the chosen system has to be
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