Economics T4 - Analysing farm businesses Flashcards
Which of the following would be a fixed cost and excluded on a typical crop gross margin budget?
land charge
machinery repairs
labour expense
harvesting expense
Land charge
It is safe to assume that the input levels shown on published gross margin budgets are the profit-maximizing amounts.
True
False
False
In an enterprise budget, Income over Variable Costs is another name for
gross income
gross margin
net income
breakeven selling price
gross margin
There is only one possible gross margin budget for each enterprise.
True
False
False
Which of the following may be excluded from variable costs when calculating a gross margin?
contract and casual labour X
machinery repairs and maintenance
veterinary and medicines
sprays and fertilisers
.
There are no opportunity costs on a gross margin budget.
True
False
False
The gross margin system of whole farm analysis:
has been developed for general business management purposes
is similar in structure and presentation to the profit statement normally prepared by farmer s accountants
conforms to the requirements of accounting for profit performance in a business
all of the above
All of the above
Interest is included as a variable cost on a gross margin budget
only if money will be borrowed
as an opportunity cost on variable costs regardless whether borrowed or equity capital will be used
because of the investment in machinery
because of the investment in land
as an opportunity cost on variable costs regardless whether borrowed or equity capital will be used
Ownership or fixed costs for farm buildings include all of the following except
depreciation X
insurance
utilities
interest on the investment
.
Only cash expenses are included on a gross margin budget.
True
False
false
A crop gross margin budget containing all economic costs would include an entry for
depreciation
opportunity cost on the capital required
fertilizer and seed
all of the above
all of the above
Gross margin statements prepared for management purposes should:
provide fully descriptive titles, including the size of the enterprise
detail both the physical and financial basis of all figures X
include both cash and non-cash items within the time scale of the statement
all of the above
.
In a farm enterprise a common unit of production is:
the land area of pasture
the total number of all stock on hand at the beginning of the year.
the number of breeding females X
the total number of stock on hand at the end of the year
.
Permanent labour and machinery costs are listed as fixed costs because:
they may be allocated on an arbitrary basis
accurate figures in relation to labour and machinery use require time consuming, detailed records
the allocation of these costs does not significantly aid the analysis of a farm
all of the above X
.
The equation for breakeven yield is total cost divided by selling price.
True
False
True
On an enterprise budget, fixed costs are often called
direct costs
operating costs
prepaid costs
ownership costs
operating costs
The values in a crop gross margin budget are normally for
one unit of output X
one kilogram of output
one tonne of output
one hectare
.
Which of the following are or could be totally noncash expenses on an enterprise budget
depreciation
labour expense
management expense
all of the above
all of the above
Only cash revenues are included on a gross margin budget.
True
False
false
A gross margin budget lists all the returns and expenses associated with producing a unit of a given enterprise.
True
False
true
Some enterprises may have more than one source of revenue.
True
False
true
If fixed costs on an enterprise budget were to increase, the market price needed to break even would increase.
True
False
true
On a breeding livestock gross margin budget, if replacement females are assumed to be raised on the farm or ranch,
an expense item for their depreciation should be shown X
the number of young females sold should be reduced
the cost of buying replacements should also be included
income from the sale of cull breeding animals can be ignored
.
Cost of production will be the same value as
average total cost
total cost
average variable cost
marginal cost X
.
A measure of whole farm profit is obtained by:
subtracting the total fixed costs from the total farm gross margin
adding the net margins of each separate farm enterprise
subtracting fixed and variable costs from the total farm gross margin X
adding crop and livestock profits
.
If the cost of production is greater than the selling price, the revenue from the enterprise will be less than the total economic costs.
True
False
true
If output increases with no change in total cost, breakeven price will
increase
decrease
remain constant
initially decrease and then begin to increase
decrease
Fixed costs are:
common to all enterprises on the farm X
do not change appreciably with small changes in the enterprise structure of the farm
cannot be allocated accurately to the various farm enterprises
all of the above
.
The cost of production is the same as average total cost.
True
False
true
For a given total cost, the higher the yield, the lower the breakeven price.
True
False
true
Contract and casual labour which can be directly attributed to an enterprise are:
listed as fixed costs
treated in the same way as permanent labour and machinery costs
listed as variable costs
best unlisted because of the time and detail required for record maintenance
listed as fixed costs
Gross margin budgets are useful when selecting enterprises to include in a whole farm plan.
True
False
true
Which of the following terms, if used on a gross margin budget, would be considered the same as variable cost?
ownership cost
operating cost
overhead cost
indirect cost
operating cost
