During the development and compilation of this report, each of the experts interviewed was asked to provide us with 3 questions that their clients should ask when determining whether or not they should move forward with the solutions presented by the experts. Following are the questions the experts say need to be asked by the client and answered by the experts for each of the case studies presented in the September 2015 issue of Farm Equipment.
Questions & Answers by Brian Pine, K-Coe Isom, Kansas City, Kan.
1. What does “fully absorbed breakeven” mean?
Fully absorbed means that all expenses (input costs, variable expenses and fixed costs) are taking into account including income taxes, living expenses and term principal payments.
2. How long of a process is the initial set-up?
It depends on the current level and detail of the producer’s bookkeeping, but in general you can expect the process to takes 2-4 months.
3. How do I know if I need this kind of assistance?
Can I answer these questions with confidence:
- Do I know my true cost of production by profit center?
- What percent of cost is my labor expense?
- Do I currently use financial reports to make critical business decisions?
- How do my ratio’s, such as current ratio, debt to asset, rate of return on assets and operating expense ratio, match up to industry standards?
If you can’t answer these questions with confidence, then assistance like that discussed in this case study would be beneficial to your operation.
