Full-Costing Analysis of Layer Egg Production Costs and Price Adequacy: A Case Study of Denis Farm, Maros Regency, Indonesia

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FORMOSA NEWS

Full Costing Analysis Confirms Denis Farm Layer Egg Production Maintains Strong Price Adequacy and Profitability

MAROS, FORMOSA NEWS — A financial audit and agribusiness study demonstrates that applying a comprehensive full-costing model accurately evaluates layer egg production costs and confirms long-term price adequacy for poultry farmers. The research was conducted by Riska Adelia, Aisyah, and Mihrani from the Department of Animal Husbandry at State Agricultural Polytechnic of Pangkajene Kepulauan (Politani Pangkep), Indonesia. Published in the International Journal of Contemporary Sciences in June 2026, the case study on Denis Farm in Maros Regency reveals that all egg market categories generated healthy profit margins above full production costs throughout the 2024 operating year.

Led by researchers from Politani Pangkep, the investigation evaluated full unit costs at Denis Farm, a commercial layer egg enterprise located in Bontomanai Village, Tompobulu District, Maros Regency, South Sulawesi. Analyzing complete monthly financial and operational records from January through December 2024, the study addresses critical economic challenges in poultry agribusiness, where volatile feed prices and flock replacement expenses create financial risks. Without accounting for fixed overhead, labor, and asset depreciation, egg producers risk underestimating unit costs and mispricing their products in competitive regional markets.

The Economic Necessity of Accurate Cost Accounting in Agribusiness

Layer egg farming plays a vital role in national food security by supplying an affordable source of animal protein to rural and urban populations. Small and medium-scale poultry enterprises drive local economic development by connecting feed suppliers, pullet producers, farm workers, and trade networks. However, farm managers frequently rely solely on daily market prices or partial cash expenses when setting product prices.

Partial accounting methods often ignore hidden expenditures, such as cage depreciation, equipment wear, indirect support labor, and veterinary health inputs. Full costing provides a complete accounting framework by assigning all direct materials, direct labor, variable overhead, and fixed overhead to the final product. Establishing an accurate Cost of Goods Sold (COGS)—locally known as Harga Pokok Produksi (HPP)—allows agribusiness owners to establish defensible price floors, protect profit margins against raw material price shocks, and maintain long-term capital replacement plans.

Quantitative Case Study Methodology

The research team from Politani Pangkep utilized a descriptive quantitative case study design to analyze the complete financial structure of Denis Farm.

The methodology comprised four structured analytical phases:

• Field Data Collection: Conducting direct farm observations, interviews with farm founder Ir. Muhammad Arsyad, S.Pi., and collecting monthly operational logs covering 10,500 Isa Brown layer hens across three cage units throughout 2024.
• Cost Component Classification: Categorizing expenses into direct production inputs (feed and pullet purchases), direct labor, variable overhead (utilities, vaccines, and medications), and fixed overhead (indirect labor and straight-line asset depreciation).
• Numerical Audit and Reconciliation: Reconciling minor arithmetic discrepancies across original monthly logs and summary tables to ensure precise unit-cost tracking.
• Unit Cost and Price Adequacy Calculation: Dividing audited annual expenditures by total tray output to establish the average cost per tray, then comparing this baseline against weighted average selling prices across three egg categories.

Key Findings on Cost Structure and Profit Margins

The full-costing analysis at Denis Farm yielded several critical findings regarding commercial egg production economics:

• Total Production Volume and Cost: Denis Farm produced 166,775 egg trays (30 eggs per tray) in 2024, incurring an audited annual full production cost of Rp3,550,915,530.
• Audited Cost Baseline: The audited annual production cost averaged Rp21,292 per tray across all egg categories.
• Heavy Dominance of Feed and Pullets: Feed ingredients (concentrate, corn, and rice bran) totaled Rp2,676,984,000 ($75.39\%$ of total cost), while pullet purchases totaled Rp630,000,000 ($17.74\%$). Together, feed and pullets accounted for $93.13\%$ of full production costs.

• Category Profit Margins: Every market category sold above the audited unit cost of Rp21,292 per tray:

• Jumbo Eggs: Average selling price of Rp51,085 per tray (Margin: Rp29,793 per tray).
• Mixed Eggs: Average selling price of Rp45,798 per tray (Margin: Rp24,506 per tray).
• Cracked Eggs: Average selling price of Rp32,507 per tray (Margin: Rp11,215 per tray).
• Annual Operating Surplus: Total annual revenue reached Rp7,963,560,000, generating an annual operating surplus of Rp4,412,644,470 and an overall sales margin of $55.41\%$.

Real-World Impact and Industry Recommendations

The study by Mihrani and her colleagues at Politani Pangkep offers practical insights for poultry farmers, agricultural managers, and agribusiness policymakers. The results demonstrate that full costing provides an effective decision-making framework, preventing short-term cash flow illusions from masking long-term asset replacement needs.

Because feed ingredients represent over three-quarters of total operational expenses, farm profitability remains highly sensitive to feed price fluctuations and feed conversion efficiency. Furthermore, because jumbo eggs yield the highest profit margin per unit while cracked eggs yield the lowest, farm managers must prioritize flock nutrition, disease prevention, and careful egg handling to maximize the proportion of premium-grade output.

"Implementing full-costing analysis is vital for poultry agribusiness managers to establish transparent cost baselines, ensuring selling prices cover recurring operating expenses and asset depreciation rather than relying on volatile market trends," stated Mihrani and the Politani Pangkep research team.

Author Profile

• Full Name: Mihrani, S.Pt., M.Si.
• Affiliation: Department of Animal Husbandry, State Agricultural Polytechnic of Pangkajene Kepulauan (Politani Pangkep), South Sulawesi, Indonesia
• Field of Expertise: Livestock Socio-Economics, Poultry Agribusiness Management, and Cost Accounting in Agriculture

Official Research Source

• Article Title: Full-Costing Analysis of Layer Egg Production Costs and Price Adequacy: A Case Study of Denis Farm, Maros Regency, Indonesia
• Authors: Riska Adelia, Aisyah, and Mihrani
• Journal: International Journal of Contemporary Sciences (IJCS), Vol. 4, No. 6, 2026, pp. 1855–1870
• DOI / Link: https://doi.org/10.55927/0ye19k07
• URL Jurnal: https://journalijcs.my.id/index.php/ijcs