Under today's conditions, the work results of each economic entity and its competitiveness increasingly depend on the production costs incurred. In practice, insufficient attention is paid to the accounting, analysis, and cost price calculation. When deciding whether or not to produce a particular unprofitable product, it is important to understand how that cost price is calculated and what expenditure is included in it.
A significant part of the costs of agribusinesses consists of the cultivation of biological assets and agricultural products, as well as related agricultural operations and services. Therefore, the distinction between biological assets, agricultural products and production in progress is very important in agribusiness. In the Accounting Law of the Republic of Lithuania (2019), economic entities choose management accounting independently. For this reason, the methodology for accounting and calculating cost price of production of biological assets and agricultural products derived from them may differ in agribusinesses. In order to properly collect cost information and use this data to calculate the cost price of biological assets and agricultural products, to prepare financial and tax reports, to analyse and to make innovative management decisions, a comprehensive and scientifically based methodology for cost accounting and price cost calculation is useful, based on which farm management accounting is formed. The most important elements of this methodology could be distinguished as follows: classification of costs; the choice of the cost accounting system and the method for recording in the accounts; selection of cost accounting and calculating price cost objects; distribution of indirect costs; consistency in calculating price cost of agricultural and processed products, and biological assets and the allocation of costs to products; the use of accounting information on expenditure for financial and tax reporting and management purposes. As agricultural production processes improve and become more complex, the level of investment increases, activities diversify and the range of products expands, it becomes increasingly difficult to manage the costs incurred and allocate them appropriately to specific products. Production costs are the basis for calculating the cost price of products produced and sold. A comparison of the alternatives for calculating the cost price of agricultural production revealed significant fluctuations in indirect production costs and cost of production, which had a significant impact on changes in financial results. The choice of the basis for allocating indirect production costs was found to have a more significant effect. Therefore, in order to prepare financial statements that give a true and fair view of the company's operations, it is important to select differentiated bases for allocating indirect production costs as accurately as possible, reflecting the fairest possible relationship between product cost objects and certain indirect production cost items, as well as choose a method of allocating costs to product cost calculation objects that reflects production technology best. The results of this study can be used by bookkeepers, originators of accounting standards, specialists of the Agricultural Advisory Service, agricultural companies, cooperatives, or other agricultural enterprises, as well as farmers' farms and residents who engage in individual agricultural activities without registering a farmer's farm and have to keep records, while calculating price cost of agricultural products and biological assets and preparing financial and tax statements.
Technology readiness level
TRL 1 - basic principles
Argumentation: Comparing the alternatives for calculating the cost price of agricultural production with this project, significant fluctuations in indirect production costs and cost of production have been identified, which have had a significant impact on changes in financial results. The choice of the basis for allocating indirect production costs was found to have a more significant effect.