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Machinery > Lec 14 > Flashcards

Lec 14 Flashcards

1
Q

The costs associated with machinery and equipment in farming have increased significantly due to several factors, what are these?

A

-the use of larger machines
-the adoption of new technology
-rising prices for parts and new machinery
-higher energy prices

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2
Q

____ plays a vital role in agricultural machinery management.

A

Economics

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3
Q

Selection of the ____ of a machine for a particular job
requires careful evaluation of all cost items.

A

size and capacity

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4
Q

____ require higher investment and may be too large
for economical operation with the rest of the machines on the farm.

A

Oversized machines

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5
Q

____ may give a lower investment but the increased labor cost may offset the savings.

A

Undersized machines

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6
Q

The machine with lower total cost _____is recommended.

A

(investment + operating)

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7
Q

The final decision is influenced by the following:

A

-suitability of the machine to the crop, to the field, and to weather conditions
-timeliness of field operation which is governed by the capacity of the machine
-availability of capital
-cost and availability of labor and fuel

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8
Q

Benefits from agricultural machinery operation:

A

-time and cost savings
-income from custom work
-value of yields
-salvage value

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9
Q

costs of owning the machine

A

fixed costs

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10
Q

costs of electricity, fuel, oil, labor and other inputs

A

variable costs

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11
Q

Also called “Fixed Costs”

A

Ownership Costs

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12
Q

Also called “Fixed Costs”

A

Ownership Costs

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13
Q

Expenses incurred regardless of whether the machine is operated or
not.

A

Ownership Costs / Fixed Costs

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14
Q

Under fixed costs are the following:

A

1.Depreciation (D)
2. Interest on Investment (IOI)
3. Shelter
4. Insurance
5. Taxes
6. Repair and Maintenance

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15
Q

Reduction in the value of the machine as a result of use (wear
and tear) and obsolescence (availability of newer and better
models).

A

Depreciation

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16
Q

Value of the machine at the end of its useful life usually estimated at zero to 10 percent of initial cost.

A

Salvage value (SV)

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17
Q

Based on experience and similar machines

A

Useful life (L)

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18
Q

Factors of Depreciation

A
  1. Age
  2. Accumulated hours of use
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19
Q

The number of years over which costs are to be estimated. It is often
less than the machine’s service life
because most farmers trade a machine for a different one before it is completely worn out.

A

Economic Life

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20
Q

A good rule of thumb for farm machines

A

10-12 years

21
Q

A good rule of thumb for tractors

A

15 years

22
Q

Estimate sale value of the
machine at the end of its economic
life.
It is the amount you could
expect to receive as a trade-in
allowance, an estimate of the used
market value if you expect to sell the
machine outright, or zero if you plan
to keep the machine unit until it is
worn out.

A

Salvage Value

23
Q

Change for the use of the money invested on the machine regardless of
whether the money was borrowed or not.

A

Interest on Investment

24
Q

Provided to protect the machine from robbers and adverse weather conditions, for ease of making repairs, and for a better appearance of
the farm.

A

Shelter

25
Q

Shelter and insurance are ____ of the average value of the machine.

A

0.5%

26
Q

Protection of the machine and shelter against calamities and theft.

A

Insurance

27
Q

Sometimes collected in some
places when machine is required to be registered with the local government.

A

Taxes

28
Q

Taxes is ____ of the average value of the machine.

A

1%

29
Q

Fixed allowance provided for the repair of machine and shelter.

A

Repair and maintenance

30
Q

Repair and maintenance is usually estimated at ____ of the initial cost.

A

10%

31
Q

Expenses incurred as a result of machine operation.

A

Variable costs

32
Q

Under variable costs are the following:

A

Power costs (electricity, fuel and oil)
Labor
Other inputs

33
Q

Usually the largest item of expense in operating powered machines.

A

Power costs (electricity, fuel and oil)

34
Q

Required to operate and maintain machines. Use wage rates prevailing locally.

A

Labor

35
Q

Include other items of cost needed for the operation of the machine.

A

Other inputs

36
Q

Average fuel consumption (in gallons per hour) for
farm tractors on a year-round basis without reference
to any specific implement can also be estimated with
these equations:
0.060 x max. PTO horsepower for gasoline engines
0.044 x max. PTO horsepower for diesel engines

A

Fuel Cost

37
Q

15% of fuel cost

A

Lubrication Cost

38
Q

Do not take into consideration the change in the value of money over time.

A

Undiscounted measures of project appraisal

39
Q

Length of time it takes to recover the invested capital or until the net benefits equal the investment cost.

A

Payback period (PBP)

40
Q

Level of operation where it neither produces a profit nor incurs a loss.

A

Break-even point (BEP)

41
Q

Time value of money is taken into account through the process of discounting.

A

Discounted measures of project worth

42
Q

Process of translating future values in present worth by applying a set of discount factors.

A

Discounting

43
Q

Present worth of benefits divided by the present worth of costs.

A

Benefit-cost ratio (BCR)

44
Q

This is the current value of all the expected benefits from the project or investment, discounted at a given interest
rate.

A

Present Worth of Benefits

45
Q

This is the current value of all the costs associated with the project or investment, also discounted at the
same interest rate

A

Present Worth of Costs

46
Q

The benefits outweigh the costs, indicating a potentially profitable or feasible project.

A

If BCR > 1

47
Q

The benefits are equal to the costs, indicating a break-even situation.

A

If BCR = 1

48
Q

The costs outweigh the benefits, suggesting that the project may not be feasible or profitable.

A

If BCR < 1

Machinery (5 decks)

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