A tractor is one example. It may be used for wheat, corn, barley, and livestock enterprises. The question becomes what portion of its fuel, depreciation, repairs, and similar costs should be allocated to each enterprise. Different approaches can be used. Perhaps allocating on the basis of acres or hours of use is reasonable.
Some activities are difficult to allocate to an enterprise, such as record keeping.
These unallocated costs can be accounted for when the enterprises are combined to understand the whole farm. 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.