Farm & Ranch Exam 3

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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


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