fm10 - Unit 2 Budgeting and Planning Topics to Cover s s s...

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Unit 2 Budgeting and Planning
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Topics to Cover Enterprise Budgets (in Farm Plan) Partial Budgets Whole-Farm Planning (Farm Plan) While-Farm Budgets (Farm Plan) Cash-Flow Budgets (possibly after test 3)
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Budgeting Looks Forward Budgets are projections. They deal with expectations for future costs and returns from following a specific plan.
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Farm Management Chapter 10 Enterprise Budgeting
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Chapter Outline Enterprise Budgets Constructing a Crop Enterprise Budget Constructing a Livestock Enterprise Budget General Comments on Enterprise Budgets Interpreting and Analyzing Enterprise Budgets
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Chapter Objectives To define an enterprise budget and discuss its purpose and use To illustrate the different sections of an enterprise budget To learn how to construct a crop enterprise budge To outline additional problems and steps to consider when constructing a livestock enterprise budget To show how data from an enterprise budget can be analyzed and used for computing cost of production and break-even prices and yields
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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
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Enterprise Budgets Income Variable Costs Gross Margin (income- vc) Fixed Cost Total Costs Profit (income - tc)
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Enterprise Budget Units Enterprise budgets cover a specific unit of production for one crop or livestock undertaking. Crops: Usually one acre. Livestock: Normal a certain number (e.g. 30 cow cow-calf operation)
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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
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