Farm Management Study Guide (CDE)

$10,000

A farmer borrows $1,000,000 to purchase farmland. The loan term is 5 years, and the loan is structured as an "interest-only" loan. The interest rate is 12%. If the farmer is making monthly payments to the bank, approximately how much is he or she paying each month

under $20,000

A farmer borrows $200,000 for ten years to purchase a tractor. The loan is fully amortizing, and the interest rate is 10%. How much interest is paid in the first year

Use all corn

Assume Corn and Milo are perfect substitutes in a feed ration for chickens. The same energy is provided by either 1 lb. of corn or 1.5 lb. of mil. If the price of corn is $.10 per lb. while the price of milo is $.08/lb, the cost minimizing producer would:

Vertical integration.

Bearkat Farms raises 2,000,000 broilers annually. In addition, Bearkat Farms owns the feed mill which provides feed for the birds, owns the processing facility, and markets the dressed birds to retail grocery stores. This type of business structure is known as:

False

Because the IRS determines the useful life of depreciable assets, they must be sold upon the end of the defined useful life

Farmer Smith will receive twice as much as Farmer Jones.

Farmer Jones marketed 65,000 bushels of wheat through his local cooperative and Farmer Smith marketed 130,000 bushels of wheat through the same local cooperative. This is the only business each had with the cooperative in 2014. When patronage dividends are distributed for 2014:

The operating agreement has a specified end

How is an operating agreement different than a partnership?

The government takes possession of the crop produced in lieu of a monetary payment

If a farmer obtains a "non-recourse" loan from the government, how is the loan repaid if crop production does not produce enough revenue to pay back the loan

Debit

In accrual accounting, what is a "left side" entry also known as?

Be unable to obtain sufficient credit elsewhere at reasonable rates and terms.

In order to borrow funds from the Farm Service Agency, a producer must:

$75,000

Joe and Mary's farm has a current ratio of 1.5. If they have $200,000 of liabilities, and $150,000 of those liabilities are long-term, what is the value of Joe Mary's current Assets?

$46,000

Mary buys an asset that qualifies to be depreciated under IRS guidelines. It was purchased for $100,000 and has a salvage value of $10,000. Assuming a useful life of 10 years, what is the book value of the asset after 6 years? (assume straight-line depreciation)

$-3

Suppose a crop consultant estimates there is a 20 percent chance of a major insect infestation, which would reduce your per acre profits by $60. There is a precautionary treatment available, but must be applied by a professional at a rate of $15 per acre. What is the expected value if you have the treatment applied?

Increase or decrease in direct proportion to the number of units of output

Variable Costs are those costs that

hundred weight

What does the abbreviation "cwt" mean

Income statement

What is another name for a profit and loss statement

Ease

What is the main advantage of a sole proprietorship

Enterprise

What type of budget projects the expected revenues and expenses of one production (corn only, for example) unit associated with a farm?

Corporation

Which business organization structure establishes the limit on liability of investors so that assets of investors cannot be encumbered beyond their investment?

Defective Skittles

Which of the following is currently used as an input for a cattle feed ration, according to a recent news report?

Purchased farm land.

Which of the following is not a depreciable asset?

Corn

Which product has the most elastic supply

California

Which state has the highest output (as measured in dollars) of total farm production

Market

Which type of risk do forward contracts alleviate?

Sonny Perdue

Who is the current Secretary of Agriculture

surplus

what condition exists when the price is higher than the market equilibrium