At that point in the process, activities that cannot be allocated can be added into the whole-farm analysis as unallocated income or expenses. Estimating Revenue Enterprise analysis requires detailed information. Another challenge in conducting enterprise analysis is gathering the necessary data, such as quantity of inputs and outputs. By placing a dollar value on the inputs and outputs, the analysis also reveals the profitability of operating the enterprise. Revenue is calculated by multiplying the units of output by its price.
Some enterprises offer more than one source of revenue.
For example, revenue sources from wheat production may include the grain, government program benefits, crop insurance payment, straw, and fall grazing. Estimating Costs Cost is generally defined as the amount that must be paid to acquire something, such as the purchase price of fuel or the rental rate of land. However, there are different types of costs, and by categorizing costs, an owner may better understand the business. For example, in a crop enterprise, the recipe's ingredients would include the type and quantity of land, seed, fertilizer, fuel, interest, depreciation, labor, and repairs used in the production process. But inputs also include the farmer's time, management skills, capital, and other investments.