Knowing your cost of production can help when making business decisions as it provides a quick way of relating your cost of producing a product with the price you are going to accept for the product. The cost of production can be calculated for any unit of production – tonnes, cases, bunches or the whole paddock.

For some crops you might calculate cost of production for more than one unit. For example, it may be useful to know the cost of production of capsicums per tonne and per case as you may be selling different units of production.

The case study describes:

• What is included in cost of production
• How to calculate cost of production
• When cost of production can be useful and why you need to be careful using cost of production
• How a grower can use cost of production to make business decisions