Exam 2 Key

Exam 2 Key - AAE 320 Exam # 2 Key: Spring 2006 1) (16 pts....

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AAE 320 Exam # 2 Key: Spring 2006 1) (16 pts. total) Provide short answers to each of the following questions. a) (2 pts.) Describe two farm management lessons you learned in the lectures that Dr. Harris presented. I took almost anything here that made some sense. b) (8 pts.) List and briefly describe the four common ways that families transfer farm assets from one generation to the next as discussed by Dr. Harris. Sale, Transfer at Death, Gift, Trade, Transfer to Business Entity c) (6 pts.) List and briefly describe three farm business arrangements discussed by Dr. Harris. Sole Proprietorship, Partnership (general or limited), Corporation (including S Corp), Limited Liability Company (LLC) 2) (16 pts. total) Evaluate the following hog contracts. The company delivers all feed and feeder pigs, pays for all vet services, and takes hogs to market. You supply the building and all labor. The company offers a price of $50 for each hog you raise (i.e., $20/cwt). Your annual fixed cost for your current building is $200,000 and your variable cost is $30 per hog. a) (4 pts.) How many hogs do you need to raise for the company to break even? 200,000 / (50 – 30) = 10,000 b) (4 pts.) How many hogs do you need to raise for the company to earn $50,000? (200,000 + 50,000) / (50 – 30) = 12,500 A tornado destroys your building. You build a new one with an annual fixed cost of $250,000 and your variable cost is now $25 per hog. c) (4 pts.) How many hogs do you need to raise for the company to earn $50,000? (250,000 + 50,000) / (50 – 25) = 12,000 New state manure regulations require you to find more crop acres on which to apply your hog manure. This raises your variable cost to $30 per hog in your new building.
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This note was uploaded on 08/08/2008 for the course AAE 320 taught by Professor Mitchell during the Spring '08 term at Wisconsin.

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Exam 2 Key - AAE 320 Exam # 2 Key: Spring 2006 1) (16 pts....

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