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Tiltle :Why do you need to know your cost of production, on an accrual method of accounting, for each commodity you produce?
 Why do you need to know your cost of production, on an accrual method of accounting, for each commodity you produce?
Added By :Dr. Danny Klinefelter, TEPEP, Texas A & M Date Added :4/18/2008
 It's absolutely critical to know your cost of production if you're going to do an effective job of marketing and pricing. You simply don't know when to into the market or where to set pricing points if you don't know what it cost you to produce something. The second is that the essential matter in allocating capital to its highest and best use. It's also important to know what to stop doing one of the things that we've found is that the best companies in this country and in Canada spend as much of their time evaluating what to quit doing as they do exploring new opportunities. The main problem for most producers is it is going to mean they're going to have to go to cost accounting and that's a far cry from where they are now with most of their record-keeping systems.
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