modent2005 - Unit 3 Budgeting and Planning Topics to Cover...

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Unit 3 Budgeting and Planning
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Topics to Cover Whole-Farm Planning (Farm Plan) While-Farm Budgets (Farm Plan) Partial Budgets Business Analysis Human Resource Management
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Whole Farm Planning Process Take resource inventory Develop Enterprise Budgets to fit your farm Find optimal (profit-maximizing) combination of enterprises Develop whole-farm budget to estimate income for the coming year
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Enterprise Budgets Get an enterprise budget from ACES for every crop and livestock enterprise currently produced by the farm. Get an enterprise budget for every new crop and livestock enterprise you consider. Should have about 7 enterprises to consider. http://www.ag.auburn.edu/aec/pubs/budgets/
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Enterprises you can’t find? If you want to consider an enterprise not available from ACES, you can check the websites of University of Georgia, University of Mississippi or LSU to see if budgets are available there.
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Make Budgets Fit Your Farm Check the yield Modify the variable costs Recalculate the break-even figures
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Modifying Your Enterprise Budgets for the Farm Plan First, look at the yield. If you think that the yield is out of line for your farm, change it. This is a judgement call. Do the same for the price. You can use the ACES yield and price unchanged if you like.
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Modify the Variable Costs If this were your actual farm, you could make line by line modifications. With the information you were given, that’s not possible, but we can get some idea of how are farm’s variable costs compare to the ACES values. We do this by finding “relative cost structure,” which is table 9 of the farm plan.
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Relative Cost Structure, Table 9 1) Collect actual variable costs from table 6 and sum them up. 2) Figure out what variable costs would have been if the farm had exactly followed ACES enterprise budgets.
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Example Assume a farm has 100 acres soybeans, 80 acres corn, and 50 brood cows.
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Variable Costs from this farm's Table 6. Cash Variable Costs SEED (CERTIFIED) 4,303.50 Technology fee 608.00 NITROGEN 3,420.00 PHOSPHATE 1,504.80 POTASH 1,026.00 LIME (PRORATED) 1,269.68 HERBICIDES 3,560.00 INSECTICIDES 1,415.50 HAULING 1,340.00 AERIAL APPLICATION 228.00 TRACTOR/MACHINERY 2,890.00 LABOR(WAGES & FRINGE) 6,500.00 PASTURE VAR COSTS 7,500.00
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modent2005 - Unit 3 Budgeting and Planning Topics to Cover...

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