Farm & Ranch Exam 3
A whole-farm budget contains
costs, returns, and resource needs for a specific set of enterprises
A cash flow budget should contain all of the following items except
depreciation
List the 4 stages of the life cycle of a farm business
entry, expansion/growth, consolidation, exit
In an enterprise budget, "Income over Variable Costs" is another name for
gross margin
Which of the following would be a fixed cost on a typical crop enterprise budget
land expense
The values in a crop enterprise budget are normally for
one acre
The values shown on a partial budget are
only changes in revenue an expenses
Which of the following are the profit increasing changes on a partial budget
reduced costs and additional revenue
A cash flow analysis of an investment in a new capital asset should include projections for
several years
A "limited" partnership is on in which
some partners do not participate in management, and have limited liability
When preparing a cash flow budget it is important to
take into account the timing of cash inflows and outflows
A partial budget is an appropriate tool for analyzing
the expansion of an existing enterprise
In a joint operating agreement, gross income is shared in proportion to each person's
total costs
In whole farm planning it is assumed that when _______ is maximized, total profit is maximized
total gross margin
What is the expected break even price per bushel
$2 per bushel
If actual yield was 156 bu/acre, what is the actual cost of production/bushel
$2.05 production/bushel
With yeild of 35 bushels per acre, what is the break-even selling price?
$4.18 per acre
If the expected yield was only 30 bushels per acre, what selling price would be required to just break-even on the operation?
$4.88 per bushel
List the 3 stages involved in a business transfer
(1) Separation/spinoff (2) Transfer/takeover (3) expansion/joint operating
Net returns
-32.63
Wheat Budget Total income
113.75
Total costs
146.38
Income above variable cost
33.45
According to your budget, what is the Cost of Production per bushel
4.18 or breakeven
If the selling price was only 2.85 per bushel, what per acre yield would be necessary to break even
51.36 bushels
Total fixed cost
66.08
Total variable cost
80.30
What is the expected break even yield
83.33 bushels
Explain the major difference in an S corporation and a C corporation
C (regular) - Taxes their employees S - Take taxes out before paying employees
A farm business that is in the consolidation stage of its life cycle will be looking for opportunities to grow, even if it means using debt capital? T/F
False
Depreciated and inventory changes are shown on a cash flow budget? T/F
False
Oral partnership agreements are not legal in most states? T/F
False
The primary use of a cash flow budget is to estimate profit for the coming year? T/F
False
Would you sign this lease and purchase the machinery
No, its net returns are negative, didnt reach the goal of production and TC>TR
List the 5 joint ventures
Partnership, cooperative, corporation, LLC, operating agreement
What is the equation for finding break even yield?
TC/expected price
What is the equation for finding break even price
TC/yield
A cash flow budget for a whole farm can be prepared on an annual, quarterly or monthly basis? T/F
True
An enterprise budget provides an estimate of potential revenue, expenses and profit for a single entry? T/F
True
Changing a crop rotation to plant 80 acres more barley and 80 acres less wheat would a decision which could be analyzed using a partial budget? T/F
True
The beginning cash balance for one time period should be the same as the ending cash balance for the previous time period? T/F
True
The most common form of farm business organization is the sole proprietorship? T/F
True
When developing a whole farm plan the inventory of resources should include labor and management skills as well as physical resources? T/F
True
A limited liability company combines the legal aspects of
a partnership and a corporation
Which of the following are characteristics of a cooperative
all of the above
A cash flow budget can be used to
all the above
Which of the following may be included on a partial budget
all the above
The number of shares a stock received by each stockholder when a farm corporation is formed is based on the ______ contributed by each stockholder
amount of equity
The purpose of liquidity analysis is to estimate if
cash inflows will be sufficient to meet expected cash outflows
A cash flow budget can be used to monitor the farm business by
comparing actual cash inflows and outflows to the budgeted monthly cash flows
