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Publication Date

1990

Series Number

4172

Abstract

The gross margin of a farm activity is the difference Variable or direct costs are those which change according between the gross income earned and the variable costs to the size of the activity, for example, drenches, dips and incurred.

Gross margins are useful for comparing similar farm activities. They are best expressed in terms of that farm resource which is most limiting (for example, per hectare, per dollar invested or per labour unit). Gross margins can be used to compare the performance of current activities or to predict the performance of a potential alternative activity.

They should not be used to compare crop activities with livestock activities, nor without taking due account of interactions between activities.

This bulletin shows how to calculate a gross margin and explains the uses and limitations of gross margin analysis, with examples from cropping and livestock activities,

Number of Pages

12

ISSN

0729-001

Publisher

Western Australian Department of Agriculture

City

Perth

Keywords

Farm economics. Gross margins, Farming, Western Australia

Disciplines

Accounting | Agribusiness | Business | Finance and Financial Management | Management Information Systems

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Bulletin No 4172 - Using gross margins

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