The keeping of profit-and-loss records, and the drawing of conclusions from them for the improvement of the business.

In recent years, the application of cost-accounting and efficiency methods to farming operations has opened practically a new approach to the discussion of agricultural problems and is forcing a reorganization in practices and in the sub-divisions of the business. Careful and extended studies have not yet been made of the efficiency principles in most horticultural occupations; but the suggestions drawn from orchard records may show the nature and scope of the work.

Annual inventory.

There is no single account that is more important than the annual inventory. This inventory should list the land and each important building separately. The total value of these items should equal the value of the farm. It should list each cow, horse and important piece of machinery separately. All the cash, notes, mortgages and accounts due the farmer should be recorded with his property. A separate list should be made of all notes, mortgages or accounts due to others. The difference between these and the value of property owned gives the net worth of the farmer. A comparison of the net worth at the beginning and end of the year shows the gain or loss for the year unless money or property has been added to the business from some other sources or taken from it.

Cost-accounts.

But an inventory does not show on which enterprises gains or losses have occurred. Usually a business is made up of both profitable and unprofitable enterprises, or of enterprises that are unequally profitable. In order to know how to develop the business to the best advantage, it is important to know which enterprises pay best for the use of land and labor. Cost accounts also have very many uses aside from determining the relative profitableness of different enterprises. If all the time spent, labor costs, and other costs, and the receipts are known, it is often possible to see ways of changing the management of a crop so as to increase profits.

In order to keep a complete cost-account with any crop, it is necessary to know all the labor of men, teams and machinery for the crop; to know all receipts and expenses caused by the cropping, and to keep track of any outlays contributed to the crop from the farm or other enterprises, also whatever this crop contributes to other enterprises.

A work-report of the time of man and horse should be kept in an ordinary account-book. At the end of the year, the total time is charged to each crop-account in the ledger. The ledger should have wide pages, so that there may be room for full descriptions. The left-hand page is used for charges, and the right-hand page for credits.

Each evening one should record any cash spent during the day under the proper crop or enterprise. The number of hours that have been spent on each enterprise for both man and horse labor are also recorded in the form shown on the next page. For convenience, the horse time is reduced to terms of one horse. A three-horse team working 10 hours is put down as 30 hours. If one desires, he may keep an account with only one enterprise. It is better to keep accounts with all the enterprises on the farm, so that one may study each part of his business and the business as a whole.

The best method of discussing the subject is to show an account as kept by a farmer. The following account with a 3-acre apple orchard was kept by a New York farmer in 1912

Work Report For Apple Orchard. - Three Acres

1912

Man

Horse

Hrs.

Min.

Hrs.

Min.

April 1. .

Manured........

9

45

18

May 8. .

,,

2

30

5

15..

Pruned.......

3

25. .

Brush hauled and burned----

1

30

3

27..

Sprayed........

16

30

13

28. .

,, ..............

4

30

5

31..

,, ........

10

15

10

June 1..

,, .........

13

45

3

45

3..

,, .........

16

30

9

4. .

,, ........

9

30

5

5. .

,, ............

14

7

7..

Cleaned and pat up sprayer. .

1

15

July 31. .

Removed borers............

7

15

Aug. 19. .

Thinned...................

11

30

20..

"

4

Manured .........

8

30

17

Sept. 7. .

Picked .........

4

15

Oct. 11. .

Hauled barrels............

8

16

12. .

Picked and packed..........

34

30

2

30

14..

" " "

7

2

15. .

,, ,, ,,

11

30

5

Hauled to station...........

2

30

5

17..

Picked and packed..........

15

45

4

18..

,, ,, ,,

12

30

30

19..

,, ,, ,,

28

30

2

21. .

,, ,, ,,

22

15

25..

,, ,, ,,

19

30

1

26. .

,, ,, ,,

25

30

1

28. .

" " "

36

30. .

" " "

34

30

Hauled to station...........

5

30

11

31. .

Picked and packed .....

21

30

1

Nov. 4. .

Selling.....................

2

1

30

6. .

Packed...................

7

30

Picked up drops............

17

3

8..

Hauled to station...........

10

15

8

12. .

Got ready for shipping......

7

30

13 .

Hauled to station.....

4

30

9

14. .

,, ,,

9

10

15..

,, ,,

9

30

14

Dec. 10..

Hauled manure.............

2

4

Total hrs. and mins....

492

45

196

15

Left-Hand Page

1912

Jan. 1. .

Inventory-barrels on hand............

$12

00

Mar. 25. .

100 lbs. arsenate of lead...........

8

10

April 5. .

Freight on arsenate of lead.............

34

1 bbl. lime-sulfur. $8; freight 28 cts.............

8

28

June 10..

3 loads manure...........

1

50

Sept. 5. .

6 1/2 loads manure................

3

25

Oct. 11..

Freight on barrels..........

6

00

18..

150 barrels.............

75

00

31..

Barrel liners, 60 cts.; freight, 25 cts............

85

Nov. 8. .

Postage................

20

Dec. 2. .

Post-cards for advertising................

3

52

Adv., "Apples for sale"..........

37

Telephone..............

25

31..

Use of land.............

40

00

493 hrs. man-labor @ 18.3 cts...........

90

22

196 hrs. horse-labor @ 13.3 cts..............

26

07

196 hrs. equipment-labor @ 5.1 cts..........

10

00

Interest on costs..................

3

00

Total..............

$288

95

Gain.....................

51

47

$340

42

Right-Hand Page

Aug.

11..

4 empty barrels sold............

$1

58

12..

1 bus. King, $I; 1 bus. Snow, 75 cts........

1

75

17..

12 bus. drop apples.........

3

00

2 empty barrels.............

1

10

21..

2 bus. Spy, 1 bus. Baldwin............

2

25

22. .

25 bus. drops............

6

25

Oct.

25..

Mrs. Franklin, 7 bbls. Baldwin, 2 bbls. King 2 bbls. Greening, 4 bbls. Spy, 1 bbl. Spitz.........

35

25

Archdeacon & Co., 6 bbls. Snow, net........

9

39

Nov.

4..

1 bbl. King, $2.25; 1 bbl. Baldwin, $1.85; 1 bbl. Spy, $2.75...............................

6

88

11..

2 bbls. Baldwin.........

3

05

15 bus. Baldwin culls.............

75

20..

12 bbls. Baldwin, $26.50; 4 bbls. Greening, $8.25; 1 bbl. Spy, $2.25; 1 bbl. Wagener, $1.75...................................

38

75

21 , .

3 bus. culls..............

1

00

111 bbls. (1 bbl. Spitzenberg, 1 bbl. King, 6 bbls. Wagener, 1 bbl. Fall Pippin, 9 bbls. Hubbardston, 69 bbls. Baldwin, 24 bbls.

Greening)...................

188

70

22..

2 bbls. Baldwin.............Bill not collected.

23..

5 bbls. (1 bbl. King, 2 bbls. Baldwin, 1 bbl.

Greening, 1 bbl.spy)............

12

75

26..

5 bbls. Baldwin..........

7

85

3 bus. Hubbardston, 6 bus. King........

5

25

Kept for home use; 3 bus. Snow, 20 bus. Baldwin...........................................

11

50

25 bus. drops to chickens.........

2

50

Total..............................

$340

42

This mere keeping of cost-accounts is not the end. The accounts must be studied. The following are a few of the facts that the farmer used in the preceding records and the suggestions derived from them:

Total crop:

Bus.

Baldwin........

421

Greening....

93

Hubbardston....

30

Spy................

23

King...............

22

Snow...............

22

Carried forward..

611

Total crop:

Bus.

Brought forward....

611

Wagener............

21

Spitzenberg.........

6

Fall Pippin..........

3

Drops and culls.......

641 105

From the foregoing records he was able to determine the yields per tree of different varieties.

Yields per acre good apples, 214 bushels.

Yield per acre culls and drops, 33 bushels.

Per cent of culls and drops, 14.

Total receipts, good apples, less cost of barrels, $233.07.

Average price per bushel, good apples, without barrels, 36 cents

Hours of man-labor, per acre, 164.

Hours of horse-labor, per acre, 65.

Profit, per acre, $17.

Profit, per hour, of man-labor, 10 cts.

Cost, per bushel, good apples, without barrels, 28 cents.

Profit, per bushel, 8 cents.

It will be seen that the cost of barrels was very high owing to buying late in the season. Ten cents a barrel extra cost is more than equal to the profit on a bushel of apples, or one-third the entire profit. Usually the profit on an enterprise can be greatly changed by small changes in cost.

The profit per acre is in addition to pay for use of land. If all the profit is expressed in terms of land, the orchard paid $27 per acre rent, or gave a profit of $14 per acre.

If the profit is all expressed in terms of labor, the orchard paid 28 cents per hour for time spent on it, or gave a profit of 10 cents per hour.

Records similar to those given above may be kept with each crop or enterprise on the farm. If this is done, an account is kept with horses from which the cost of an hour of horse-labor is determined. At the end of the year, the labor on each crop for the year is charged at this rate. Similarly, the cost of man-labor is found and charged. The cost of machinery-labor is charged in proportion to the hours that horses worked for the enterprise. This is how the costs per hour given above were determined. But if a complete set of accounts is not kept, the charge for labor of men and horses is placed at the usual rate of pay for such work in the region, including the cost of board. References: "Farm Management," G. F. Warren, pp. 428-93 (1913). Minnesota Bulletins, Nos. 97, 117, and 124. "Farm Accounts," J. A. Vye. G. F. Warren.