fm-chapter10 - Farm Management Chapter 10 Enterprise...

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Unformatted text preview: Farm Management Chapter 10 Enterprise Budgeting farm management chapter 10 2 Chapter Outline Enterprise Budgets Constructing a Crop Enterprise Budget Constructing a Livestock Enterprise Budget General Comments on Enterprise Budgets Interpreting and Analyzing Enterprise Budgets farm management chapter 10 3 Chapter Objectives 1. To define an enterprise budget and discuss its purpose and use 2. To illustrate the different sections of an enterprise budget 3. To learn how to construct a crop enterprise budge 4. To outline additional problems and steps to consider when constructing a livestock enterprise budget 5. To show how data from an enterprise budget can be analyzed and used for computing cost of production and break-even prices and yields farm management chapter 10 4 Enterprise Budgets An enterprise budget provides an estimate of potential revenue, expenses, and profit for a single enterprise Each type of crop or livestock is an enterprise The base unit for crops is usually one acre The base unit for livestock may be one head or some other convenient size farm management chapter 10 5 Table 10-1 Example Enterprise Budget for Watermelons (1 acre) Item Revenue 250 cwt @ $5.50 per cwt $1,375.00 Variable Costs Seed $80.00 Fertilizer 95.50 Chemicals 97.75 Machinery expense 35.15 Custom Spray 8.00 Harvesting and Hauling 500.00 Labor 320.00 Interest @ 10% for 6 months 56.82 Total variable cost $1,193.22 Income above variable cost $181.78 Fixed Costs Machinery depreciation, interest, taxes, and insurance $62.00 Land charge 100.00 Total fixed costs $162.00 Total costs $1,355.22 Estimated Profit (return to management) $19.78 Value per acre farm management chapter 10 6 Constructing a Crop Enterprise Budget...
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fm-chapter10 - Farm Management Chapter 10 Enterprise...

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