homework6-2010-key

homework6-2010-key - Homework for Chapter 10 Name _...

This preview shows pages 1–3. Sign up to view the full content.

Homework for Chapter 10 Name ___________________ ENTERPRISE BUDGETING I. Assume you have a chance to rent 1,000 acres of cropland for 5 years. You can raise only wheat. Your problem is to develop an enterprise budget to see if this venture will be profitable before you sign the lease and purchase the necessary machinery. A. MACHINERY NEEDED (Use only for the 1,000 acres of wheat.) Machine Cost Salvage Value Useful life Annual Taxes Annual Insurance 1. Tractor \$140,000 \$50,000 5 yrs. \$65 \$150 2. Chisel \$17,600 \$9,600 5 yrs. \$20 \$ 45 3. Disk \$18,800 \$8,800 5 yrs. \$20 \$ 45 4. Grain drill \$18,000 \$5,000 5 yrs. \$20 \$ 55 5. Pickup \$25,000 \$12,000 5 yrs. \$95 \$520 B. MACHINERY CALCULATIONS - AVERAGE ANNUAL FIXED COSTS (Use 8% opportunity cost for capital .) Depreciation Interest Taxes Insurance Tractor 18,000.00 7,600.00 \$65 \$150 Chisel 1,600.00 1,088.00 \$20 \$45 Disk 2,000.00 1,104.00 \$20 \$45 Grain drill 2,600.00 920.00 \$20 \$55 Pickup 2,600.00 1,480.00 \$95 \$520 TOTALS 26,800.00 12,192.00 220.00 815.00 Cost per acre 26.80 12.19 0.22 0.82 C. OTHER INFORMATION 1. Expected yield 40.0 bu per acre 2. Selling price \$ 3.75 per bu. 3. Labor cost - preharvest \$ 10.80 per acre 4. Land rent \$25.00 per acre 5. Fertilizer cost \$30.00 per acre 6. Seed cost 18.00 per acre 7. Chemical cost \$ 10.00 per acre

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
C. OTHER INFORMATION (CONT.) 8. Tractor variable cost \$10.20 per acre 9. Variable cost on other mach. & equip. \$ 3.85 per acre 10. Custom harvesting, hauling, etc. \$20.00 per acre
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/15/2011 for the course AGEC 7100 taught by Professor Duffy,p during the Fall '08 term at Auburn University.

Page1 / 5

homework6-2010-key - Homework for Chapter 10 Name _...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online