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Principles of Agricultural Management Final Exam Review

Principles of Agricultural Management Final Exam Review -...

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Principles of Agricultural Management: Final Exam 1. Chapter 8 #3 : Identify & define the three major types of budgets. How do they relate to each other? a. The Operating Budget – Has separate back-up budgets that compare projected sales & expenses from each division that separates your variable costs & fixed costs. b. Cash Flow Budget – This contains your cash receipts & disbursements. A cash flow budget will tell managers how to plan cash & financing needs. c. Capital Expenditure Budget – The decision of which items to buy & which items to defer is made by placing a priority ranking on each item. The rankings ensure the money spent on capital items is allocated in an efficient manner. d. Benefits: i. Budgets provide a way to measure business performance. ii. Budgets keeps managers focused on the financial implications of their business decisions. iii. Budgets help managers communicate expectations & quickly spot deviations. e. Limitations: i. Budgets are estimates, not sure things. ii. The execution of a budget is not automatic. iii. Budgets cannot take the place of good management iv. Good budgeting requires time & patience. 2. Chapter 9 #2 a. What defines a critical task in a business? How does a manager go about finding them? What part do they play in the organizational structure of the firm? Critical tasks are the activities that must be done well if the business it to achieve its purpose and objectives. The manager goes about finding them by defining its business structure and what line of business it
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wants to pursue. (eg. It would not make any sense to go in a market of sales when your line of business is service.) 3. Chapter 9 #3 a. Identify & define the four principles of organization design, describe how they relate to one another and to the success of an agricultural business. 1.) Keep the organization structure simple, 2.) Give critical task prominence and allow them to function without restriction, 3.) Keep support staff to a minimum, & 4.) Keep working units small. Strict adherence to these four
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