Cost specification
The cost breakdown report of the Total Calculation service presents the most important cost items. The costs are grouped into main categories, which are:
- Material and supply costs
- Farm use costs
- Livestock costs
- Machinery costs
- Building costs
- Other costs
- Labor costs
- Interest costs
Machinery, building, and other costs include depreciation also for assets acquired with investment grants. Correspondingly, the investment grants received by the enterprises are included in the enterprise's returns, allocated over time.
Labor costs include, in addition to paid wages, the wage claim item, i.e., the value of the entrepreneur family's own labor. The wage claim is calculated by multiplying the working hours performed by the entrepreneur family by a pre-set hourly wage claim, which corresponds to the hourly cost of a hired employee.
Interest costs, in turn, include interest expenses on debt as well as the cost item for the interest claim on equity. The interest claim is calculated by multiplying the equity by the weighted equity interest rate of all enterprises.
Costs are reported on an accrual basis and in millions of euros. The accrual basis means that expenses are recognized as costs in the fiscal year in which the inputs were used.
Production costs include all cost items related to agriculture and horticulture. The difference between revenue and production costs yields the entrepreneur's profit, which reflects absolute profitability.
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