Introducing Activity-Based Costing in Farm Management: The Design of the FarmBO System

Carli, Giacomo; Canavari, Maurizio and Grandi, Alessandro (2014). Introducing Activity-Based Costing in Farm Management: The Design of the FarmBO System. International Journal of Agricultural and Environmental Information Systems, 5(4) pp. 69–84.

DOI: https://doi.org/10.4018/ijaeis.2014100104

Abstract

Recent research indicates that farm managers do not rely on adequate informative support in their decision making processes. This paper proposes a model of a Farm Management Information System which integrates the Activity-Based Costing approach. In describing the design and development of the “FarmBO” system, it provides a detailed functional requirement definition and the description of a working system prototype. The solution is designed to show the impact of general costs on the different crops, allocating them on the basis of the production cycle complexity. It includes a report section directly linked to the database which provides crop balance sheets and simulations in terms of what-if analyses. The system allows farm managers to 1) analyze deviations between budgeted and actual costs; 2) compare crop balance sheets across different years; 3) perform sensitivity analyses. This work accounts for prototype validation in two farms and discuss results and possible developments.