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Two main forms of cost analysis are used in the model, in order cover the majority of the needs of the analyst. • • Cost breakdown by operation or activity Cost breakdown by input factor
The structure of the first is:
machinery and raw materials. but it emphasises on the use of resources such as labour.This form can be detected at any depth of detail and describes the importance of the various operations required for crop production. The layout can be inspected below: Each of the cost analysis forms and formats may be inspected in a large number of monitoring (pivot) tables which are calculated on the fly for • Each crop . The second structure (by Factor) is somewhat similar.
42 thousand eur per typical year. is equal to 156. annual cost may differ among the years of the plantation life. if overall cost estimation is required. To calculate the annual equivalent cost. costs that express lifetime averages incorporating the time value of money. the present value of all costs over the useful life of the plantation is transformed into an equivalent annuity with an annual uniform payment which is the annual equivalent cost. The overall cost estimates are calculated as annual equivalent costs. inspecting the individual cost in such analysis is of no use because some operations are not performed regularly and uniformly year after year and therefore. The present value of total cost (PV) is calculated by means of the Present Value formula: .e. assume the following annual costs of a project: The present value of all costs.• • • Each land type Each year Each month in any combination.66 thousand eur. which is then distributed by means of an annuity to 49. since every detail is being available to the user. This is very useful mainly for auditing purposes. However. i. As an example. including the base year (year zero) investment cost.
where d is the discount rate. and TCt is the Total Cost in year t. The Annual Equivalent Cost is then calculated from the annuity formula: The format of a standard Annual Equivalent Cost table is as in the following example: . and n is the number of years of useful economic life.