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Managerial Accounting Case

The John and Mary farmer is a big time producer of corn and soybeans. With 1060 acre, the crop farm is located in the mid-west Corn Belt. Technically, John and Mary only managed the 340 acre out of their 1060 corn and soybean farm. The 480 acre is rented through 50/50 crop share, while the 320 acre is rented through cash by five different owners. In a sense, the unique characteristic or feature of John and Mary’s farm is that theirs has one common machinery line used in farm operations between the farm John and Mary and their son who operates his own farm independently.

John and Mary’s son holds the total 700 acre of the corn and soybeans farm, and shares his major farm tractor with his parents. Moreover, the couple manages and operates their farm as a sole-proprietor, which agriculture farming has been a part of their family legacy. Although the couple has been well hands-on in managing and running their farm, john is the one who is more active to take care of the daily operations of their farm and have been the major decision maker, while Mary has a brilliant career outside of their farm.

However, John is getting old and is nearing to reach his retirement age in about five to seven years. With this, John wants to leave the farm office with a great management and operation system to ensure the future of the farm even after his retirement. Essentially, John wanted to set up a managerial accounting system for future management purposes. The first proposed solution for this case, on the other hand, is useful to the John and Mary farmer as well as with other agricultural enterprise seeking to set up management accounting techniques.

With the proposed solution, the farm owner will be able to determine significant centers of the farm – support cost center, production cost center, profit center and cost center. Essentially, this proposed solution will help the owner and gather a comprehensive data report, which are all useful information for the management. In deeper review of the proposed solution, this will give a clear data of the shop, equipment, maintenance and the entire farm. Will provide a thorough report of the production stages and will determine the product profit for every year.

In addition to this, the proposed solution will be essential to establish reliable sales, financing, administration and financing aspects. In a sense, all of these are the positive benefits that the proposed solution can provide for John and Mary’s farm as well as to other agricultural enterprise who seeks to set up a reliable management accounting techniques. Nevertheless, this proposed solution can be the reliable managerial accounting system that John wanted to set up for their farm after his retirement to ensure its future and monitor the financial performance of their farm.

However, the proposed solution is a bit complicated, which carry a complex schematic relationship between each center. One possible drawback of this proposed solution is that execution may become laborious to task to do, which if the correct procedure is not done properly the result may vary and could give inappropriate data. In the end, the first proposed solution may definitely give the exact and appropriate managerial accounting system that John and Mary needs in their farm. Nonetheless, I hereby recommend the alternative proposed solution for this case study.

Designed in a more basic technique, the alternative can provide exactly the needs of John and Mary for their farm like the first proposed solution do. The proposed alternative solution carry as well the three major centers that the first solution have – Support Cost Centers, Production Cost Centers and Profit Center to ensure the and record the entire financial performance of their farm in a more basic way. Reference Farm Financial Standards Council (n. d), Managerial Accounting Case Studies: Retrieved June 7, 2008 from http://www. ffsc. org/FFSC_MA_Current_Report_Case_Study_NO1__021506. pdf

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