Activity-based costing and process costing in dual-purpose cattle farms

Livestock production systems involve biological and operational complexities that make accurate cost allocation, identification of major sources of expenditure, and evaluation of optimization alternatives challenging. Among the costing approaches used in production systems, activity-based costing (ABC) focuses on the activities that consume resources, whereas process costing accumulates costs across production stages. Integrating these methods can provide a more comprehensive understanding of resource consumption in dual-purpose cattle systems, where production costs vary according to the physiological and productive stages of animals throughout the production cycle. To address this challenge, an integrated ABC/process costing methodology was applied to a dual-purpose cattle production system through a case study. The proposed approach enabled the characterization of the production system by allocating costs according to activities, processes, and management categories, providing a detailed representation of the farm's cost structure. Feeding and labor accounted for >80% of total production costs, while lactation represented the most expensive process due to the concentration of productive and management activities required during this stage. Sensitivity analysis further indicated that labor and forage were the cost components with the greatest influence on total production costs. The integrated methodology also identified the activities with the greatest resource demand and the management categories with the largest contribution to the overall cost structure. The ABC/process methodology provided a comprehensive framework for understanding cost allocation and accumulation within the evaluated production system, generating practical information to support technical and economic decision-making at the farm level.