2001 Missouri FFA
Farm Management Contest
2001 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
provided. There is only one correct answer to each question.
1. Corn has an expected yield of 125 bushels per acre and a production cost
of $180.00 per acre. Expected market prices are $2.00 per bushel for corn
and $5.30 per bushel for soybeans. Soybeans can be raised at a production
cost of $115 per acre. At what breakeven yield per acre would soybeans
generate the same net return per acre as corn?
A. 34.9 bushels
B. 37.3 bushels
C. 40.2 bushels
D. 48.1 bushels
E. None of the above
2. If high oil corn has the same production cost per acre as regular corn but
can be sold for 20 cents per bushel more, what yield of high oil corn is
needed to equal 125 bushels of regular corn at $2.00 per bushel?
A. 109.1 bushels
B. 113.6 bushels
C. 117.5 bushels
D. 120.7 bushels
E. None of the above
3. For tax year 2000, the social security wage base was
A. $65,400
B. $68,500
C. $73,300
D. $76,200
E. None of the above
4. A farmer purchases 600-pound feeder steers for 95 cents per pound and
plans to sell the steers at 800 pounds. The farmer estimates the total
cost of gain to be 40 cents per pound. The nearest breakeven price when
the steers are sold at 800 pounds is
A. 64.75 cents/pound
B. 73.75 cents/pound
C. 80.00 cents/pound
D. 81.25 cents/pound
E. None of the above
5. How many total acres are included in the "S 1/2 of the NE 1/4 and SE 1/4
of the NW 1/4 of Section 15, Twp. 10N, R4W of the 5th Principle Meridian"?
A. 80 acres
B. 120 acres
C. 160 acres
D. 240 acres
E. None of the above
6. How much perimeter fence would be required to completely enclose the
parcel of land described in the question above?
A. 1.5 miles
B. 2.0 miles
C. 2.5 miles
D. 3.0 mile
E. None of the above
7. How many acres are in a section of land?
A. 40 acres
B. 160 acres
C. 640 acres
D. 1,000 acres
E. None of the above
8. A township is six miles square and includes
A. 6 sections.
B. 36 sections.
C. 40 sections.
D. 160 sections.
E. None of the above
9. Farmer Jones has less current assets than current liabilities. Her
current ratio is
A. negative.
B. zero.
C. between 0 and 1.
D. greater than 1.
E. None of the above
10. The present value formula for estimating land prices (PV = annual net
returns divided by discount rate) assumes
A. future prices and yields can be estimated accurately.
B. the discount rate is appropriate.
C. income will continue to infinity.
D. net income will not trend up or down.
E. All of the above
11. A soybean producer decides to store his soybeans in the local elevator for
4 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 5,000 bushels to sell and must borrow $30,000 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. $4.50
B. $4.63
C. $4.75
D. $5.02
E. None of the above
12. How many square feet are in an acre?
A. 5,280
B. 12,250
C. 43,560
D. 100,000
E. None of the above
13. A decrease 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. decreased exports.
D. no effect on imports or exports.
E. None of the above
14. The term "exchange rate" refers to
A. how much of one currency is needed to acquire a unit of another
currency.
B. how much principal is reduced by payments on an amortized loan.
C. the ratio between current and long-term debt.
D. the difference in value between a dollar today and a dollar one
year from today.
E. None of the above
15. A cord is a stack of wood measuring
A. 2' x 4' x 4'
B. 4' x 4' x 4'
C. 4' x 4' x 8'
D. 4' x 8' x 8'
E. None of the above
16. A procedure for expressing future cash flows in today's dollars is called
A. compounding.
B. discounting.
C. deflating.
D. inflating.
E. None of the above
17. Farmer Brown has a debt-to-asset ratio of 53%. His debt-to-equity ratio
must be
A. negative.
B. 47%.
C. Less than 100%.
D. Greater than 100%.
E. None of the above
18. A constant payment loan with payments consisting of principal and interest
is called
A. an amortized loan.
B. a complementary loan.
C. a discounted loan.
D. a fixed rate loan.
E. a capital loan.
19. The "rule of 72" says to divide 72 by the annual interest rate to estimate
the number of years needed for an initial investment earning that rate to
double. How long would it take for $1 earning 6% a year to grow to $8?
A. 12 years
B. 24 years
C. 36 years
D. 48 years
E. None of the above
20. A charge for capital used in a farmer's cattle herd is usually included in
an enterprise budget regardless of the farmer's equity position with
respect to the herd (it does not depend on whether he borrowed money to
buy the cows or not). This illustrates the principle of
A. marginal cost.
B. fixed cost.
C. opportunity cost.
D. variable cost.
E. alternative cost.
21. For an amortized loan, the amount of interest in the first payment will be
A. more than the amount of the principal.
B. less than the amount of the principal.
C. equal to the amount of the principal.
D. dependent on the length of the loan.
E. None of the above
22. How many pounds of 48% protein soybean meal must be mixed with 7% protein
corn to make a ton of 15% protein feed?
A. 316 pounds
B. 390 pounds
C. 439 pounds
D. 487 pounds
E. None of the above
23. For an amortized loan, the present value of the loan payments discounted
at the loan's interest rate is equal to
A. the amount of money borrowed.
B. the number of payments times the payment amount.
C. total interest paid over the life of the loan.
D. the size of the annual payment.
E. None of the above
24. A $1 deductible expense (before tax) will cost ______ after tax if the
farmer's marginal tax rate is 43%.
A. $0.43
B. $0.57
C. $0.65
D. $1.00
E. None of the above
25. A farmer began the year with an outstanding balance of $50,000 on his
operating loan and accrued interest of $500 on the loan. The loan carries
an interest rate of 10% on outstanding principal. Six months later he
makes a $3,000 payment on the loan. After this payment he will have an
accrued interest of
A. $0.
B. $500.
C. $1,000.
D. $2,000.
E. None of the above
26. Farmer Johnson has a rate of return on assets of 9% when assets are valued
using the cost method, and a rate of return on assets of 5% when the
assets are valued using market valuation. This means that the value of
assets using the cost method
A. is greater than the market valuation.
B. is equal to the market valuation.
C. is less than the market valuation.
D. produces a lower return to farm assets.
E. None of the above
27. A farmer has a debt/worth ratio of 1:2.5. The current liabilities total
$30,000 and the non-current liabilities total $90,000. What is the value
of the assets?
A. $420,000
B. $360,000
C. $240,000
D. $120,000
E. None of the above
28. A cattle feeding operation has sales of $730,000, feed purchases of
$300,000, other costs of $400,000, an opening inventory of $400,000, and a
closing inventory of $380,000. What is the net farm income for this
operation on an accrual basis?
A. $10,000
B. $30,000
C. $50,000
D. $730,000
E. None of the above
29. If corn silage as fed contains 60% moisture and 2.9% protein, the dry
matter would be what percent protein?
A. 2.80
B. 3.08
C. 6.57
D. 7.25
E. None of the above
30. On March 1, 2000, Kate borrowed $25,000 to plant corn. On November 1,
2000, she repaid the $25,000 along with $1,734.37 interest. What annual
interest rate did she pay?
A. 8.50%
B. 9.25%
C. 9.75%
D. 10.41%
E. None of the above
31. In preparing a cash flow statement, one should not include the following:
A. family living expenses.
B. interest payments.
C. tax refunds.
D. purchases on credit.
E. None of the above
32. To consider the time value of money in analyzing alternative farm
investments, one should choose the investment with the
A. highest net present value.
B. largest net cash flow over the lifetime of the investment.
C. highest average profits over the investment lifetime.
D. lowest cost.
E. None of the above
33. A $50,000 loan amortized at 8% interest for 20 years yields annual
payments of $5,092.61. How much of the first year's payment is principal?
A. $1,092.61
B. $1,700.00
C. $2,592.61
D. $4,000.00
E. None of the above
34. For the above loan of $50,000, if the 20th and final payment includes
$377.23 of interest, what was the outstanding principal balance after the
19th payment?
A. $5,688.07
B. $4,715.38
C. $4,622.77
D. $377.23
E. None of the above
35. For the above loan of $50,000, how much total interest is paid over the
life of the loan?
A. $101,852.20
B. $51,852.20
C. $43,000.00
D. $7,544.60
E. None of the above
36. At the beginning of last year, a farmer had an outstanding loan for
$125,000. The interest rate was 9% APR. If the farmer made one loan
payment at the end of the year of $20,500, what was the outstanding
balance at the end of the year?
A. $104,500
B. $113,750
C. $115,750
D. $120,500
E. None of the above
37. A feedlot operator purchases a pen of 100 feeder steers with an average
weight of 703 pounds and sells them at an average weight of 1081 pounds.
Total feed cost for the pen is $16,634. Feed cost per pound of gain is
equal to
A. $0.440
B. $0.515
C. $0.649
D. $0.720
E. None of the above
38. A producer sells 12 feeder steers for $80/cwt. The average weight per
steer is 750 pounds. There is a 3% sales commission and yardage fees of
$2.10 per head. The net amount received for the pen of steers would be
A. $6,027.60
B. $6,028.36
C. $6,052.80
D. $6,958.80
E. None of the above
39. A trader with a short position in the futures market
A. profits when prices go down, loses when prices go up.
B. profits when prices neither go up nor down.
C. profits when prices go up, loses when prices go down.
D. loses when prices either go up or down.
E. cannot lose money.
40. Total interest to be paid over the life of an amortized loan equals
A. number of payments times size of payment.
B. number of payments times size of payment minus amount borrowed.
C. amount of money borrowed times interest rate.
D. amount of money borrowed times interest rate times number of
payments.
E. None of the above
41. How many gallons of water must be mixed with a pint of herbicide to make a
1% solution?
A. 12.375
B. 12.500
C. 25.000
D. 99.000
E. None of the above
42. A metric ton weighs
A. 1876.3 pounds
B. 2000.0 pounds
C. 2204.6 pounds
D. 2520.3 pounds
E. None of the above
43. A hectare equals
A. 0.40 acres
B. 1.74 acres
C. 2.47 acres
D. 5.05 acres
E. None of the above
44. The main reason for hedging is
A. to make more profit.
B. to insure against a production loss.
C. to reduce the price risk associated with producing or storing a
cash commodity.
D. to take an opposite position from the speculator.
E. None of the above
45. Which is heavier, a bushel of shelled corn or a bushel of soybeans?
A. Shelled corn
B. Soybeans
C. They weigh the same.
D. Depends on whether measured in pounds or kilograms.
E. None of the above
46. In legal terminology, an agent has one's
A. right of ownership of property.
B. authority to transact business.
C. complete control and liability.
D. no financial responsibility.
E. None of the above
47. Roundup ready soybeans are now widely used by farmers. This has caused
the demand curve for Treflan (a grass control herbicide for soybeans) to
move
A. upward and to the right.
B. downward and to the left.
C. not at all.
D. None of the above
Farmer Douglas will buy 600 pound steers in late October. He will have to pay
$90 per hundredweight for the 600 pound steers. Expected annual prices for
1050 pound steers is $75 per cwt. However, there is normally seasonal
variation in fed cattle prices. The monthly price indexes for slaughter
steers are:
Index Index
January 102 July 96
February 103 August 97
March 104 September 98
April 103 October 99
May 100 November 101
June 97 December 100
48. What price for 1050 pound steers can Mr. Douglas expect for an April
selling date?
A. $72.82 per cwt.
B. $75.00 per cwt.
C. $77.25 per cwt.
D. $78.00 per cwt.
E. None of the above
49. What price can Mr. Douglas expect for a March selling date?
A. $72.80 per cwt.
B. $75.00 per cwt.
C. $77.25 per cwt.
D. $78.00 per cwt.
E. None of the above
50. Assuming an April selling date and all costs (excluding purchase of the
feeder steers) totals $200 per head, Mr. Douglas can expect a profit of
A. less than $0 (he would lose money).
B. $0 - $49.99 per head.
C. $50 - $99.99 per head.
D. $100 - $149 per head.
E. over $150 per head.
______________________________________________________________________________
2001 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 - Market Value Balance Sheet
Using the information below, complete the net worth statement for January 1,
2001:
Land . . . . . . . . . . . . . . . . . . . . $845,000
House . . . . . . . . . . . . . . . . . . . 140,000
Machinery and equipment. . . . . . . . . . . 112,000
Cows . . . . . . . . . . . . . . . . . . . . 50,000
Calves . . . . . . . . . . . . . . . . . . . 30,000
Accounts payable . . . . . . . . . . . . . . 1,650
Wheat. . . . . . . . . . . . . . . . . . . . 11,800
Sows and boars . . . . . . . . . . . . . . . 22,000
Market hogs . . . . . . . . . . . . . . . . 54,000
Checking and savings . . . . . . . . . . . . 17,761
Autos. . . . . . . . . . . . . . . . . . . . 41,000
Hog buildings . . . . . . . . . . . . . . . 84,000
Feed and hay . . . . . . . . . . . . . . . . 14,250
Accounts receivable. . . . . . . . . . . . . 24,500
Accrued interest owed. . . . . . . . . . . . 18,750
Accrued taxes owed . . . . . . . . . . . . . 17,400
30-year land loan balance is $262,500.
$12,500 plus interest is due March 1 of each year.
5-year truck loan balance is $8,450.
$4,000 plus interest is due August 31 of each year.
20-year home loan balance is $62,500.
$2,500 plus interest is due each March and September.
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, 2001, was
A. $116,011
B. $127,811
C. $152,311
D. $174,311
E. None of the above
2. The total value of non-current assets was
A. $1,318,500
B. $1,294,000
C. $1,274,000
D. $1,233,000
E. None of the above
3. The total value of current liabilities was
A. $56,800
B. $59,300
C. $61,800
D. $64,800
E. None of the above
4. The total value of non-current liabilities was
A. $311,950
B. $314,450
C. $333,450
D. $371,250
E. None of the above
5. The net worth was
A. $1,021,671
B. $1,164,811
C. $1,294,000
D. $1,446,311
E. None of the above
6. The current ratio was
A. 0.37
B. 2.09
C. 2.57
D. 2.68
E. None of the above
7. The equity to asset ratio was
A. 0.257
B. 0.345
C. 0.743
D. 0.895
E. None of the above
PROBLEM II -- Enterprise Budget
Use the following alfalfa budget to answer Questions 8 through 16.
ALFALFA HAY, irrigated, circular sprinkler, all equipment owned,
conventional bale
______________________________________________________________________________
Operating Inputs Units Price Qty. Value Your Value
Establishment, prorate Ac 131.380 .200 $26.30 __________
Insecticide Ac 13.500 1.660 22.41 __________
Phosphorus (P205) Lbs 0.110 100.000 11.00 __________
Rent fertilizer
spreader/ac. Ac 2.440 1.000 2.44 __________
Baling wire Bale .120 195.000 23.40 __________
Annual operating capital $ .105 11.163 1.18 __________
Machinery labor Hr 6.000 3.215 19.29 __________
Irrigation labor Hr 6.000 1.775 10.65 __________
Mach. fuel, lube, repairs $ 39.56 __________
Irrig. fuel, lube, repairs $ 131.67 __________
Total operating costs $287.90 __________
Fixed costs
Machinery: Amount Value
Interest at 10.675% 346.90 37.03 __________
Depr., taxes, insurance 41.61 __________
Irrigation equipment:
Interest at 10.675% 485.34 51.81 __________
Depr., taxes, insurance 42.90 __________
Total fixed costs 173.35 __________
Production Units Price Quantity Value
Alfalfa hay Tons 80.00 6.50 520.00 __________
Total receipts 520.00
Returns above total operating costs 232.10 __________
Returns above all specified costs 58.75 __________
______________________________________________________________________________
8. Total operating cost per acre is
A. $58.75
B. $173.35
C. $232.10
D. $287.90
E. None of the above
9. The return above total operating cost per acre is
A. $58.75
B. $173.35
C. $232.10
D. $287.90
E. None of the above
10. How many hours of labor are budgeted per acre?
A. 1.775
B. 3.215
C. 4.990
D. 6.000
E. None of the above
11. What is the average weight of the hay bales?
A. 50.0 pounds
B. 66.7 pounds
C. 75.0 pounds
D. 82.5 pounds
E. None of the above
12. What is the total budgeted interest cost per acre?
A. $37.03
B. $51.81
C. $88.84
D. $90.02
E. None of the above
13. How many tons of hay are produced in a 40-acre field?
A. 40
B. 80
C. 260
D. 520
E. None of the above
14. What was the cost per acre to establish the stand of alfalfa?
A. $26.30
B. $131.38
C. $287.90
D. Not enough information given
E. None of the above
Some adjustments need to be made to the budget. Fertilizer and labor costs
are too low.
15. If fertilizer (P205) costs 20 cents per pound and spreading costs $3
per acre, how much will per acre costs increase?
A. $9.00
B. $9.56
C. $10.00
D. $12.00
E. None of the above
16. With the higher fertilization costs and labor at $8 per hour, what
will be the expected per acre return over all budgeted costs? (ignore
changes in capital costs.)
A. $39.21
B. $40.66
C. $205.21
D. $212.56
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 items.
On March 15, 2000, Dave bought a used combine. Dave paid $15,000 "down" and
financed the remaining $15,000 over 3 years at 10% interest.
17. The combine is
A. 3-year property
B. 5-year property
C. 7-year property
D. 10-year property
E. None of the above
18. If Dave does not expense any of the cost of the combine, then 2000
depreciation will be (use regular MACRS and mid-year convention)
A. $1,607.10
B. $2,250.00
C. $2,812.50
D. $3,214.20
E. None of the above
19. If Dave expenses none of the combine cost and uses the mid-quarter
convention and regular MACRS, then 2000 depreciation will be
A. $2,812.50
B. $3,937.50
C. $5,625.00
D. $5,814.50
E. None of the above
20. If Dave expenses the maximum allowable on the combine and uses regular
MACRS, then 2000 depreciation will be
A. $0
B. $1,071.40
C. $1,607.10
D. $3,214.20
E. None of the above
21. If Dave expenses the maximum and uses the mid-year convention and
straight line depreciation over the alternate MACRS life, his 2000
depreciation will be
A. $0
B. $500
C. $750
D. $1,500
E. None of the above
22. Under MACRS, a crop irrigation well is classified as
A. 10-year property
B. 15-year property
C. 20-year property
D. not depreciable
E. None of the above
PROBLEM IV -- Supply and Demand
