2000 Missouri FFA
Farm Management Contest
Multiple Choice Section
The Farm Management Contest is designed to test student understanding of the
application of economic principles in farm management. Each question is worth
three (3) points.
Choose the best answer and mark the appropriate box on the score sheet. There
is only one correct answer to each question.
1. On a crop enterprise budget that does not include any charges for land,
which number corresponds to the maximum amount that a farmer could pay in
cash rent per acre in the short run?
A. Total operating costs
B. Returns above total operating costs
C. Total costs
D. Returns above total costs
E. None of the above
2. On a crop enterprise budget that does not include any charges for land,
which number corresponds to the maximum amount that a farmer could pay in
cash rent per acre in the long run?
A. Total operating costs
B. Returns above total operating costs
C. Total costs
D. Returns above total costs
E. None of the above
3. A soybean producer decides to store his soybeans in the local elevator for
six months. The price at harvest is $4.50 per bushel and the elevator
charges 2 cents per bushel per month for storage plus a 5 cents per bushel
handling charge. He has 4,000 bushels to sell and must borrow $24,000 at
8% annual interest while he stores the soybeans. What price must he
receive for his soybeans to break even and cover his storage and
opportunity costs?
A. $4.85
B. $4.91
C. $5.03
D. $5.15
E. None of the above
4. A $50,000 loan amortized at 10% interest for 5 years yields annual
payments of $13,189.87. How much of the first year's payment is
principal?
A. $3,189.87
B. $8,189.87
C. $11,870.88
D. $13,189.87
E. None of the above
5. For the above loan of $50,000, if the fifth and final payment includes
$1,199.08 of interest, what was the outstanding principal balance after
the fourth payment?
A. $3,189.87
B. $8,189.87
C. $11,990.79
D. $13,189.87
E. None of the above
6. If the interest rate is 10%, what is the present value of a dollar to be
received by a producer two years from now?
A. $0.826
B. $0.900
C. $1.100
D. $1.210
E. None of the above
7.If corn silage as fed contains 65% moisture and 2.5% protein, the dry
matter would be what percent protein?
A. 2.50
B. 3.85
C. 5.71
D. 7.14
E. None of the above
8.Farmer Brown purchases a new tractor. A record keeping system which
records both the addition to equipment and the reduction of cash is called
A. income statement.
B. dual effect.
C. balance sheet.
D. double entry.
E. None of the above
9. The cost of producing one additional unit of output is called
A. opportunity cost.
B. substitution cost.
C. average cost.
D. marginal cost.
E. None of the above
10.A farmer purchases 700-pound feeder steers for 85 cents per pound and
plans to sell the steers at 1100 pounds. The farmer estimates the total
cost of gain to be 45 cents per pound. The nearest breakeven price when
the steers are sold at 1100 pounds is
A. 60.7 cents/pound.
B. 70.5 cents/pound.
C. 73.4 cents/pound.
D. 76.7 cents/pound.
E. None of the above
11.A farmer has total assets of $500,000 of which land is $300,000. The
farmer's debt:equity ratio is 1.0. What will the farmer's debt:equity
ratio be if the lender devalues the land by 10%?
A. .64
B. .88
C. 1.14
D. 1.22
E. None of the above
12.On April 1 Lynn borrowed $25,000 to buy seed and fertilizer. On Dec. 1
she repaid the $25,000 along with $1828.33 interest. What annual interest
rate did she pay?
A. 9.75%
B. 10.97%
C. 11.75%
D. 12.25%
E. None of the above
13.How many total acres are included in "SW 1/4 of NE 1/4 and S 1/2 of NW 1/4
of Section 15, Twp. 10N, R4W of the 5th Principle Meridian"?
A. 80 acres
B. 120 acres
C. 160 acres
D. 320 acres
E. None of the above
14.How much perimeter fence would be required to completely enclose the
parcel of land described in the question above?
A. 1.0 mile
B. 1.5 miles
C. 2.0 miles
D. 2.5 miles
E. None of the above
15.A grain farmer who normally stores his soybeans at a local elevator has
decided to use the options market to create a synthetic storage. To do so
he will sell his beans at harvest and
A. buy a put option.
B. sell a put option.
C. buy a call option.
D. sell a call option.
16.The role of price in a free market is to serve as a guide
A. in controlling quantity supplied.
B. in limiting quantity demanded.
C. in allocating consumption.
D. in deciding what, when, and how much to produce.
E. All of the above
17.A farmer is solvent if
A. he has sufficient current assets to cover current debts.
B. he has sufficient equity to cover debts.
C. he has sufficient assets to cover all debts.
D. he can pay all debts with all equity.
E. All of the above
18.A Subchapter S corporation can have no more than
A. 10 shareholders.
B. 15 shareholders.
C. 35 shareholders.
D. 75 shareholders.
E. There is no limit on number of shareholders.
19.Corn has an expected yield of 120 bushels per acre and has a production
cost of $140.00 per acre. Current market prices are $2.00 per bushel for
corn and $5.00 per bushel for soybeans. Soybeans can be raised at a
production cost of $110 per acre. At what breakeven yield per acre would
soybeans generate the same net return per acre as dryland corn?
A. 31.9 bushels
B. 35.2 bushels
C. 38.7 bushels
D. 42.0 bushels
E. None of the above
20.Purchase of a call option on corn means the buyer
A. is required to sell a corn futures contract at a set price.
B. may sell, but is not required to sell, a corn futures contract at a
set price.
C. may buy, but is not required to buy, a corn futures contract at a set
price.
D. is required to buy a corn futures contract at a set price.
E. None of the above
21.The disadvantage of leasing a tractor as compared to purchasing is that
leasing
A. increases your income tax.
B. decreases your depreciation and capital expensing.
C. releases capital for other uses.
D. reduces output per worker.
E. costs less in the long run.
22.How many pounds of 48% protein supplement must be mixed with 8% protein
corn to make a ton of 16% protein feed?
A. 300 pounds
B. 400 pounds
C. 550 pounds
D. 600 pounds
E. None of the above
23.The capital gains taxes that would be due should a farmer sell his land is
an example of a
A. current liability.
B. long-term liability.
C. deductible expense.
D. contingent liability.
E. None of the above
24.The best example of a fixed cost in a corn production enterprise budget
would be
A. seed corn.
B. fuel and oil.
C. land ownership costs.
D. interest on operating capital.
E. machinery repairs.
25.Which of the following statements regarding accrued interest is most
nearly true?
A. Beginning accrued interest will always be less than ending accrued
interest.
B. Beginning accrued interest will always be greater than ending accrued
interest.
C. Accrued interest pertains only to short-term debt.
D. Accrued interest pertains only to intermediate and long-term debt.
E. Accrued interest is not a cash expense until it is paid.
26.Diminishing marginal returns to a factor of production are most likely to
occur when
A. one factor is increased and all others are fixed.
B. one factor is fixed and all others are increased in equal proportion.
C. all factors are increased in equal portion.
D. One factor is decreased and all others are fixed.
E. None of the above
27.A cattle feeder, wishing to use futures markets to hedge the price of
slaughter cattle, would at the time of his cattle purchase
A. buy futures contracts expecting to sell the contracts when selling
cattle.
B. sell futures contracts expecting to sell more contracts when selling
cattle.
C. sell futures contracts expecting to buy contracts when selling
cattle.
D. buy futures contracts expecting to buy more contracts when selling
cattle.
E. All of the above
28.An increase in the value of the U.S. dollar relative to the currency of
other countries should result in
A. more costly imports.
B. less costly imports.
C. increased exports.
D. no effect on imports or exports.
E. None of the above
29.A feedlot operator buys feeder steers, finishes them, and sells them. The
operator estimates that finished steers will sell for $70 per cwt. and
that it will cost $170 per head to bring them from the 750 pound purchase
weight to the 1100 pound selling weight. What is the highest price the
operator can pay for 750 pound feeder steers to break even?
A. $61.73/cwt.
B. $70.25/cwt.
C. $76.14/cwt.
D. $80.00/cwt.
E. None of the above
30.The demand curve shows the relationship between
A. consumer tastes and the quantity demanded.
B. price and the quantity demanded.
C. price and production costs.
D. money income and quantity demanded.
E. None of the above
31.A part-time farmer has 160 acres of land, 40 cows and can only work 400
hours per year on his farm. An acre of corn requires 3 hours of labor and
yields 80 bushels. An acre of beans take 2.2 hours and yields 30 bushels.
Each cow needs 7 hours of labor, 3 acres of land, and consumes 16 bushels
of corn. What is the maximum number of acres of soybeans he can grow if
the farmer keeps 40 cows and does not buy any corn?
A. 32
B. 64
C. 94
D. 104
E. None of the above
32.A vicious cold spell in the late spring has wiped out the buds on the
peach trees grown in Georgia, a major peach producing state. How will
this freeze impact the price received for peaches by Maryland peach
producers?
A. No effect -- Georgia is too far away to have any impact on Maryland.
B. Will lower the price because the demand for peaches will be lower.
C. Because of the reduced supply, prices for peaches in Maryland will
tend to move upward.
D. No effect -- Maryland does not grow enough peaches to have any impact
on prices.
E. None of the above
33.During the year, a farmer pays $1,800 principal and $500 interest on a
tractor loan. His annual depreciation is $2,000. His deductible operating
expenses (fuel, oil, repairs, etc) associated with operating the tractor
totaled $500. His marginal tax rate is 25%. What is his after-tax cash
cost of using the tractor for the year?
A. $ 750
B. $2,100
C. $2,050
D. $3,600
E. None of the above
34.A farmer traded a tractor with an adjusted tax basis of $5,000. The new
tractor had a list price of $50,000. The dealer allowed a $15,000 trade-
in for the old tractor. The farmer paid $10,000 of his own money and
borrowed $25,000 to pay the balance. What is the tax basis of the new
tractor?
A. $15,000
B. $35,000
C. $40,000
D. $50,000
E. None of the above
35.A written agreement by which an owner of property transfers title to
someone for the benefit of beneficiaries is a
A. trust.
B. partnership.
C. corporation.
D. sole proprietorship.
E. None of the above
36.A producer sells 9 feeder steers for $78/cwt. The average weight per
steer is 700 pounds. There is a 2.5% sales commission and yardage fees of
$2.30 per head. The net amount received for the pen of steers would be
A. $4,256.20
B. $4,240.80
C. $4,618.00
D. $4,770.45
E. None of the above
37.The price of widgets changes from $100 to $90 and, as a result, the
quantity demanded increases from 50 to 60 units. From this we can
conclude that
A. the demand for widgets is elastic.
B. the demand for widgets is inelastic.
C. the demand for widgets is of unit elasticity.
D. the demand for widgets has declined.
E. None of the above
38.In analysis of a farm, what would you do if a cash flow projection
indicated that there would be more expense than income in a certain month?
A. Terminate the enterprise causing the cash flow problem that month.
B. Use savings, delay expenses, move up sales, or borrow money.
C. Change from cash to accrual accounting method.
D. Change depreciation methods.
E. None of the above
39.If the total cost of producing 100 units of output is $500 and the average
variable cost is equal to $1, then which of the following statements is
true?
A. Total variable cost of the 100 units is $400.
B. Total fixed cost is equal to $100.
C. Average fixed cost is equal to $4.
D. Average total cost is equal to $4.
E. None of the above is true.
40.Farmer Jones wants to plant a crop with a 4-in spacing in 30-inch rows.
If there are 100,000 seeds in a bushel, how many bushels will he seed per
acre. (Hint: 43,560 sq. ft. in an acre.)
A. 0.24
B. 0.52
C. 1.07
D. 1.91
E. None of the above
41.Which of the following would not appear on a cash flow statement?
A. Interest paid on a loan for a tractor
B. Principal paid on a loan for a tractor
C. Depreciation expense on a tractor
D. Rental payment received from the neighbor who used the tractor.
E. None of the above
42.Frank's beginning balance sheet showed $40,000 in corn stored at the local
elevator. Which of these would not explain his ending balance sheet entry
of $20,000 corn stored at the local elevator?
A. He sold some corn during the year.
B. The price of corn was lower at the end of the year.
C. He had less corn stored at the end of the year than the beginning.
D. All of these could explain the decrease.
E. None of these would explain the decrease.
43.Frank expects his wheat to yield 40 bushels per acre and sell for $4.00
per bushel. He has spent $75 per acre on seed, fertilizer, fuel, and
chemicals so far as of January 1. It will cost $10 per acre to harvest
and deliver the wheat to market. Right now he could only get $3.00 per
bushel for the wheat. His balance sheet asset entry should reflect
A. the $75 per acre he has spent so far.
B. the $160 per acre he expects to receive when sold.
C. $120 based on today's price.
D. the $160 per acre minus the $75 spent so far and minus the $10 per
acre to harvest the wheat.
E. None of the above
44.An increase in total operating costs of $20 per acre will increase the
breakeven price of the crop by how much if the yield is 100 units per
acre?
A. $0.02 per unit
B. $0.20 per unit
C. $2.00 per unit
D. $20.00 per unit
E. None of the above
45.An increase in total costs of $20 per acre will increase the breakeven
yield by how many units if the price the price is $2.00 per unit.
A. 5 units
B. 10 units
C. 20 units
D. 100 units
E. None of the above
In analyzing last year's records, Frank Farmer paid $10,000 in interest and
$20,000 in principal. His value of farm production was $150,000. His gain on
the sale of assets was $0. His net farm income was $40,000. The value of
unpaid labor and management was $10,000. His depreciation totaled $10,000.
His average assets totaled $300,000 and his average net worth was $100,000.
Hint: Value of farm production equals net farm income plus interest plus
depreciation plus gain or loss on sale of assets plus operating expenses.
46.What was his rate of return on equity?
A. 0%
B. 10%
C. 20%
D. 30%
E. None of the above
47.What was his operating ratio?
A. 50%
B. 60%
C. 70%
D. 80%
E. None of the above
48.What was his turnover?
A. 0%
B. 5%
C. 50%
D. 100%
E. None of the above
49.If the rate of return to assets is 10%, and the average interest rate is
8%, what would the debt-to-asset ratio need to be for Frank in order for
him to earn a rate of return on equity of 16%?
A. 25%
B. 50%
C. 67%
D. 75%
E. None of the above
50.If Frank's turnover is 60%, assets are $500,000, and rate of return to
assets is 8%, what is his value of farm production?
A. $100,000
B. $200,000
C. $300,000
D. $400,000
E. None of the above
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2000 MISSOURI FFA FARM MANAGEMENT CONTEST
Problems Section
Choose the best answer and mark the corresponding numbered space on the answer
sheet. Computations may be done in the margins or on the back of the paper.
Each question is worth four (4) points. There is only one correct answer for
each question.
PROBLEM I - Balance Sheet
Using the information below, complete the net worth statement for January 1,
2000:
Land . . . . . . . . . . . . . . . . . . . . $550,000
Autos . . . . . . . . . . . . . . . . . . . 31,000
Machinery and equipment. . . . . . . . . . . 95,000
Cows . . . . . . . . . . . . . . . . . . . . 60,000
Calves . . . . . . . . . . . . . . . . . . . 35,000
Accounts payable . . . . . . . . . . . . . . 16,500
Wheat. . . . . . . . . . . . . . . . . . . . 18,400
Sows and boars . . . . . . . . . . . . . . . 25,000
Market hogs . . . . . . . . . . . . . . . . 47,500
Checking and savings . . . . . . . . . . . . 9,415
House. . . . . . . . . . . . . . . . . . . . 96,000
Hog buildings . . . . . . . . . . . . . . . 45,000
Feed and hay . . . . . . . . . . . . . . . . 14,250
Accounts receivable. . . . . . . . . . . . . 14,500
Accrued interest owed. . . . . . . . . . . . 18,750
Accrued taxes owed . . . . . . . . . . . . . 17,400
30-year land loan balance is $238,000.
$9,000 plus interest is due March 1 of each year.
7-year building loan balance is $41,000.
$11,000 plus interest is due August 31 of each year.
20-year home loan balance is $62,500.
$3,500 plus interest is due each December 1.
Current Assets: Current Liabilities:
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
Total _________________ Total __________________
Non-current Assets: Non-current Liabilities:
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
__________________________________ ___________________________________
Total _________________ Total __________________
Total Assets _________________ Total Liabilities ________________
Net Worth _________________
Questions 1 through 7 refer to PROBLEM I
1. The total value of current assets on January 1, 2000, was:
A. $120,665
B. $139,065
C. $164,065
D. $205,665
E. None of the above
2. The total value of non-current assets was:
A. $806,000
B. $877,000
C. $902,000
D. $920,400
E. None of the above
3. The total value of current liabilities was:
A. $23,500
B. $52,650
C. $72,650
D. $76,150
E. None of the above
4. The total value of non-current liabilities was:
A.$259,000
B.$318,000
C.$332,500
D. $341,500
E. None of the above
5. The net worth was:
A. $465,415
B. $500,515
C. $563,015
D. $584,000
E. None of the above
6. The current ratio was:
A. 0.134
B. 0.548
C. 1.826
D. 2.836
E. None of the above
7. The debt to equity ratio was:
A. 0.379
B. 0.492
C. 0.609
D. 0.621
E. None of the above
PROBLEM II -- Enterprise Budget
Use the following cow-calf budget to answer Questions 8 through 16.
COW-CALF, spring calving, warm season pasture; cost/return per cow; ranch
size unit; winter DM is 25% non-legume hay
______________________________________________________________________________
Operating Inputs Units Price Qty. Value Your Value
Non-legume hay Lbs. 0.050 964.000 $48.20 __________
41-45% protein sup. Lbs. 0.130 299.000 38.87 __________
19-20% pro. feed Lbs. 0.080 367.000 29.36 __________
Salt & minerals Lbs. 0.100 30.000 3.00 __________
Summer pasture AUMs 8.400 8.000 67.20 __________
Winter dry pasture AUMs 8.400 3.550 29.82 __________
Vet. service Head 14.650 1.000 14.65 __________
Vet. med., lstk. supplies Head 2.800 1.000 2.80 __________
Marketing expense Cwt. 1.750 4.320 7.56 __________
Personal taxes Head 5.300 1.000 5.30 __________
Herd bulls Cwt. 85.000 0.122 10.37 __________
Hauling Cwt. 0.500 4.320 2.16 __________
Annual operating capital Dol. 0.107 150.000 16.05 __________
Machinery labor Hour 6.000 4.574 27.42 __________
Equipment labor Hour 6.000 0.050 0.30 __________
Livestock labor Hour 6.000 5.330 31.98 __________
Mach. fuel, lube, repair Dol. 27.30 __________
Equip. fuel, lube, repair Dol. 1.18 __________
Total operating costs $363.52 __________
Fixed costs
Machinery: Amount Value
Interest at 10.675% 54.58 5.83 __________
Depr., taxes, insurance 10.69 __________
Equipment:
Interest at 10.675% 13.43 1.43 __________
Depr., taxes, insurance 2.59 __________
Livestock
Beef cow 720.00 _______
Bull 40.50 _______
Beef heifer 60.00 _______
Horse 3.40 _______
Interest at 10.675% 823.90 87.95 __________
Depr., taxes, insurance 10.47
Total fixed costs 118.96 __________
Production Units Price Quantity Value
Steer calves (400-500#) Cwt. 87.00 1.92 167.04 __________
Heifer calves (400-500#) Cwt. 79.00 1.27 100.33 __________
Commercial cows Cwt. 41.00 0.87 35.67 __________
Aged bulls Cwt. 51.00 0.14 7.14 __________
Heifers (600-700#) Cwt. 72.00 0.12 8.64 __________
Total receipts 318.82
Returns above total operating costs -44.70 __________
Returns above all specified costs -163.66 __________
__________________________________________________________________________
8. Total operating cost per cow is:
A. $16.05
B. $118.96
C. $318.82
D. $363.52
E. None of the above
9. The return above total operating cost per cow is:
A. -$163.66
B. -$44.70
C. $318.82
D. $363.52
E. None of the above
10. How many hours of labor are budgeted per cow?
A. 6.000
B. 9.954
C. 18.000
D. 59.700
E. None of the above
11. What is the total budgeted interest cost per cow?
A. $68.01
B. $87.95
C. $95.21
D. $111.26
E. None of the above
12. What price per ton is paid for hay?
A. $5.00
B. $48.20
C. $50.00
D. $100.00
E. None of the above
13. What are the per cow costs directly attributed to feed?
A. $97.02
B. $119.43
C. $168.25
D. $216.45
E. None of the above
14. How many pounds of cattle are sold per cow?
A. 319
B. 432
C. 450
D. 500
E. None of the above
15. If the price of all cattle increases by 10% and the price of hay drops by
50%, what will be the per cow receipts above total operating costs
(ignore any change in operating capital expense)?
A. $11.28
B. $55.97
C. $62.87
D. $107.68
E. None of the above
16. What will be the returns above all costs if you include the changes from
question 15 and pay only $60 for pasture rent?
A. -$99.81
B. -$70.66
C. -$13.27
D. $188.10
E. None of the above
PROBLEM III -- Income Tax Management
Use the tables at the end of this exam to calculate depreciation on the
following item.
On March 5, 1999, Sam traded corn planters. The old planter had a remaining
undepreciated value of $6,718. Sam paid $18,000 "boot" in the trade for the
new planter.
17. The planter is:
A. 3-year property
B. 5-year property
C. 7-year property
D. 10-year property
E. None of the above
18. If Sam does not expense any of the cost of the planter, then 1999
depreciation will be (use regular MACRS and mid-year convention):
A. $1,928.52
B. $2,471.80
C. $2,648.29
D. $3,310.48
E. None of the above
19. If Sam expenses the maximum on the planter trade, and uses the mid-
quarter convention and regular MACRS, then 1999 depreciation will be:
A. $1,072.12
B. $1,259.62
C. $3,375.00
D. $4,634.62
E. None of the above
20. If Sam does not expense and uses the mid-year convention and straight
line depreciation over the alternate MACRS life, his 1999 depreciation
will be:
A. $1,235.90
B. $1,765.57
C. $2,471.80
D. $3,531.14
E. None of the above
21. In order to use the mid-quarter convention, at least ______ percent of
Sam's 1999 purchases of depreciable property must have been made in the
fourth quarter.
A. 60%
B. 50%
C. 40%
D. 33%
E. None of the above
22. Under MACRS, a swine farrowing house is classified as
A. 7-year property
B. 10-year property
C. 15-year property
D. 20-year property
E. None of the above
PROBLEM IV -- Supply and Demand
(graph in separate file)
The above graph represents the current supply of wheat in the U.S. (S), the
expected supply of wheat once the CRP program ends (S1), the foreign demand
for U.S. wheat (DF), the domestic demand for U.S. wheat (DUS), and the total
demand for U.S. wheat (DT).
For questions 23-25, use the current wheat supply (S).
23. What is the market equilibrium price of wheat in the U.S.?
A. P1
B. P2
C. P3
D. P4
E. None of the above
24. At the market equilibrium price, how much wheat will be used in the U.S.?
A. Q1
B. Q2
C. Q3
D. Q4
E. Q5
25. At the market equilibrium price, how much wheat will be exported?
A. Q1
B. Q2
C. Q3
D. Q4
E. Q5
26. Without foreign demand, the equilibrium price of wheat would be
A. P1
B. P2
C. P3
D. P4
E. None of the above
For questions 27 and 28, assume the CRP program ends and the wheat supply
increases from S to S1.
27. The change in supply will cause the market equilibrium price to
A. increase.
B. decrease.
C. not change.
D. None of the above
28. After the end of CRP, U.S. wheat exports should
A. increase.
B. decrease.
C. stay the same.
D. None of the above
PROBLEM V - Marketing
On March 25, a farmer buys 300 head of feeder pigs. He sells them as
slaughter hogs on August 5. Ignore commissions, and interest.
March 25 quotes: August 5 quotes:
August futures price = $60.15 August futures price = $58.80
Expected basis = $0.50 under the board Basis = $0.25 over the board
Strike ---- Premiums ---- ---- Premiums ----
price Call Put Call Put
$60.00 $6.05 $0.55 $2.40 $0.21
$62.00 $4.35 $1.15 $0.90 $1.12
$64.00 $3.10 $1.85 $0.45 $2.98
$66.00 $2.10 $2.75 $0.07 $4.71
$68.00 $1.37 $4.00 $0.02 $6.55
29. What is the cash price of hogs on August 5?
A. $58.55
B. $58.80
C. $59.05
D. $59.30
E. None of the above
30. If the farmer sold a futures contract on March 25 and bought back the
contract on August 5, what would be the realized price per hundredweight
(cash + net on futures) for these hogs?
A. $58.80
B. $59.05
C. $60.15
D. $60.40
E. None of the above
31. If the farmer bought a $64.00 Put on March 25 and sold the Put on August
5, what would be the realized price per hundredweight (cash + net on
options) for his hogs?
A. $56.18
B. $57.92
C. $60.18
D. $60.40
E. None of the above
32. If the farmer bought a $64.00 Put and sold a $64.00 Call on March 25, and
sold the Put and bought back the Call on August 5, what would be the
realized price per cwt. (cash + net on options) for his hogs?
A. $55.27
B. $58.40
C. $60.55
D. $62.83
E. None of the above
33. Given all the information above, which of the following actions taken on
March 25 turned out to be the most profitable?
A. Selling a futures contract.
B. Buying a $64 Put option.
C. Buying a $64 Put and selling a $64 Call.
D. Taking no market action.
PROBLEM VI - Diminishing Returns
Rich Farmer has 2,000 bushels of corn stored on his farm. He can sell it at
the local elevator for $2.00 per bushel. It will cost him $.10 per bushel to
haul it to the elevator. Rich is considering feeding the corn to some hogs.
He can buy 45 pound feeder pigs for $1.10 per pound delivered to his farm.
Rich will grind and mix his own hog feed. His ration consists of 80 pounds of
corn and 20 pounds of commercial feed additive. He can get the commercial
additive delivered for $180 per ton.
Rich plans to market the hogs at 260 pounds. He thinks it will take 120 days
of feeding to reach that weight. He expects a 3.4 to 1 feed conversion ratio.
34. How many pounds of corn does Rich have? (Hint: Corn weighs 56 pounds
per bushel.)
A. 56,000
B. 67,200
C. 84,000
D. 112,000
E. None of the above
35. How much commercial feed additive will he need to buy to mix with the
2,000 bushels of corn?
A. 16,800 pounds or 8.4 tons
B. 21,000 pounds or 10.5 tons
C. 28,000 pounds or 14 tons
D. 50,000 pounds or 25 tons
E. None of the above
36. Given the limited corn supply, how many pounds of gain (at 3.4 to 1) can
Rich get if he feeds an 80-20 ration?
A. 29,474 pounds
B. 35,000 pounds
C. 41,176 pounds
D. 48,512 pounds
E. None of the above
37. How many feeder pigs should Rich buy (assuming a zero death loss)?
A. 166
B. 174
C. 183
D. 191
E. 200
Rich decides to feed the pigs. He buys 185 head which average 44 pounds each.
Five die and he sells 180 which average 257 pounds. He has 140 bushels of
corn left.
38. What feed conversion did Rich actually get?
A. 3.31 pounds of feed per pound of gain
B. 3.36 pounds of feed per pound of gain
C. 3.42 pounds of feed per pound of gain
D. 3.55 pounds of feed per pound of gain
E. None of the above
39. What is the total feed cost for these pigs?
A. $5,057.80
B. $5,575.20
C. $5,877.60
D. $8,219.50
E. None of the above
40. If Rich's costs (other than feed and pigs) were $25 per pig purchased,
what was Rich's breakeven selling price?
A. $41.20 per cwt.
B. $42.06 per cwt.
C. $46.05 per cwt.
D. $51.51 per cwt.
E. None of the above
PROBLEM VII - Alternative Investments
P. H. Trouble recently purchased a 320-acre farm which the local bank had
acquired. The previous owner had not applied any lime to the farm in years.
P. H. had soil tests run on each of the fields and the results show a need for
more lime than P. H. can afford in one year. After consulting with his local
extension agronomist, P. H. develops the following table of expected results
from liming.
Expected Annual Yield Per Acre
_____________________________________________________________________
Field #1 --- Field #2 --- Field #3
Tons of 40 ac. 120 ac. corn-bean 140 ac.
lime alfalfa rotation fescue
applied hay Corn Beans pasture
per acre (tons) (bu.) (bu.) (AUM)
0 3.5 90 27 9.4
1 4.0 95 32 9.8
2 4.4 99 36 10.1
3 4.7 102 39 10.4
4 4.8 104 41 10.6
5 4.9 105 42 10.7
_____________________________________________________________________
Assume alfalfa is worth $75 per ton, soybeans $5.50 per bushel, corn $2.40 per
bushel, and fescue $8 per AUM.
Lime costs $15 per ton (delivered and spread) and should last for several
years. Use the amortized figure of $3 per ton per year to compare with the
above table.
41. In order to maximize profits, how much lime should P. H. apply to the
alfalfa?
A. 2 ton per acre
B. 3 ton per acre
C. 4 tons per acre
D. 5 tons per acre
E. None of the above
42. In order to maximize profits, how much lime should P. H. apply to the
fescue pasture?
A. 1 ton per acre
B. 2 ton per acre
C. 3 tons per acre
D. 4 tons per acre
E. None of the above
43. Field #2 is annually planted to 60 acres of corn and 60 acres of soybeans
with the crops being rotated within the field. In order to maximize
profits, how much lime should P. H. apply to Field #2?
A. 2 ton per acre
B. 3 ton per acre
C. 4 tons per acre
D. 5 tons per acre
E. None of the above
44. Money is limited. P. H. can only afford to spend $4,500 (300 tons) on
lime. To which fields should this 300 tons be applied?
A. 160 tons to Field #2 and 140 tons to Field #1
B. 120 tons to Field #2 and 180 tons to Field #1
C. 180 tons to Field #2 and 120 tons to Field #1
D. 180 tons to Field #1 and 120 tons to Field #3
E. None of the above
45. What rate of return on investment will P. H. get if he applies one ton of
lime per acre to his fescue pasture?
A. 5.0%
B. 6.7%
C. 11.5%
D. 16.7%
E. None of the above
PROBLEM VIII - Profit and Loss
Jackie Jackson's crop farm has cash revenue for the year of $200,000. Her
farm cash operating expenses for the year total $175,000. Her farm
depreciation for the year is $30,000. The value of her grain inventory
increased by $15,000 from January 1 to December 31. Using only this
information, answer questions 46-50.
46. Jackie's cash flow for the year was
A. negative by $40,000.
B. negative by $10,000.
C. positive by $5,000.
D. positive by $25,000.
E. None of the above
47. Jackie's net farm income based on cash accounting is
A. -$5,000.
B. $0.
C. $5,000.
D. $25,000.
E. None of the above
48. Jackie's net farm income based on accrual accounting is
A. -$5,000.
B. $5,000.
C. $10,000.
D. $25,000.
E. None of the above
49. The accrual basis value of farm production is
A. $200,000.
B. $215,000.
C. $230,000.
D. $245,000.
E. None of the above
50. Jackie's taxable income based on cash accounting is
A. -$5,000.
B. $0.
C. $5,000.
D. $25,000.
E. None of the above
ANNUAL DEPRECIATION PERCENTAGES FOR 5-YR PROPERTY, 150% DB
_________________________________________________________________
MID-QUARTER CONVENTION
Tax MID-YEAR Quarter placed in service --
Year CONVENTION 1 2 3 4
1 15.000% 26.250% 18.750% 11.250% 3.750%
2 25.500 22.125 24.375 26.625 28.875
3 17.850 16.520 17,062 18.637 20.212
4-5 16.660 16.520 16.763 16.567 16.404
6 8.330 2.065 6.287 10.354 14.355
Total 100.000 100.000 100.000 100.000 100.000
_________________________________________________________________
ANNUAL DEPRECIATION PERCENTAGES FOR 7-YR PROPERTY, 150% DB
_________________________________________________________________
MID-QUARTER CONVENTION
Tax MID-YEAR Quarter placed in service --
Year CONVENTION 1 2 3 4
1 10.714% 18.750% 13.393% 8.036% 2.679%
2 19.133 17.411 18.559 19.707 20.854
3 15.033 13.680 14.582 15.484 16.386
4 12.249 12.160 12.221 12.275 12.874
5-7 12.249 12.160 12.221 12.275 12.182
8 6.124 1.520 4.582 7.673 10.661
Total 100.000 100.000 100.000 100.000 100.000
_________________________________________________________________
ANNUAL FRACTIONS FOR STRAIGHT LINE OVER N YEARS (N less than 26)
_________________________________________________________________
MID-QUARTER CONVENTION
Tax MID-YEAR Quarter placed in service --
Year CONVENTION 1 2 3 4
1 1/2 7/8 5/8 3/8 1/8
2-N 1 1 1 1 1
N+1 1/2 1/8 3/8 5/8 7/8
_________________________________________________________________
Depreciation formula: Basis divided by N times number from above
table.
ANNUAL FRACTIONS FOR 27 1/2 YEAR PROPERTY, REGULAR MACRS
_________________________________________________________________
Tax Month Placed in Service --
Year 1 2 3 4 5 6 7 8 9 10 11 12
1 11.5 10.5 9.5 8.5 7.5 6.5 5.5 4.5 3.5 2.5 1.5 0.5
2-27 12 12 12 12 12 12 12 12 12 12 12 12
28 6.5 7.5 8.5 9.5 10.5 11.5 12 12 12 12 12 12
29 -- -- -- -- -- -- 0.5 1.5 2.5 3.5 4.5 5.5
_________________________________________________________________
Depreciation formula: Basis divided by 27 1/2 divided by 12 times
number from above table.
ANNUAL FRACTIONS FOR 39 YEAR PROPERTY, REGULAR MACRS
_________________________________________________________________
Tax Month Placed in Service --
Year 1 2 3 4 5 6 7 8 9 10 11 12
1 11.5 10.5 9.5 8.5 7.5 6.5 5.5 4.5 3.5 2.5 1.5 0.5
2-39 12 12 12 12 12 12 12 12 12 12 12 12
40 0.5 1.5 2.5 3.5 4.5 5.5 6.5 7.5 8.5 9.5 10.5 11.5
_________________________________________________________________
Depreciation formula: Basis divided by 39 divided by 12 times number
from above table.
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2000 STATE FFA FARM MANAGEMENT CONTEST
KEY
Multiple Choice
1. B 11. C 21. B 31. A 41. C
2. D 12. B 22. B 32. C 42. D
3. A 13. B 23. D 33. C 43. A
4. B 14. C 24. C 34. C 44. B
5. C 15. C 25. E 35. A 45. B
6. A 16. E 26. A 36. D 46. D
7. D 17. C 27. C 37. A 47. B
8. D 18. D 28. B 38. B 48. C
9. D 19. D 29. D 39. C 49. D
10. B 20. C 30. B 40. B 50. C
Problems
1. B 11. D 21. C 31. C 41. D
2. C 12. D 22. B 32. D 42. A
3. D 13. D 23. D 33. C 43. D
4. B 14. B 24. B 34. D 44. C
5. E 15. A 25. A 35. C 45. B
6. C 16. B 26. B 36. C 46. D
7. C 17. C 27. B 37. D 47. A
8. D 18. C 28. A 38. C 48. C
9. B 19. B 29. C 39. C 49. B
10. B 20. A 30. D 40. B 50. A