2006 Missouri FFA
Farm Management Contest
2006 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. How many bushels of corn are in a metric tonne?
A. 33.3
B. 35.7
C. 36.7
D. 39.4
E. None of the above
2. How many total acres are included in "S 1/2 of NE 1/4 and E 1/2
of NW 1/4 of Section 15, Twp. 10 N, R 4W of the 5th Principle
Meridian"?
A. 80 acres
B. 120 acres
C. 160 acres
D. 320 acres
E. None of the above
3. 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
4. The self-employed tax rate for Medicare is
A. 1.5%
B. 2.1%
C. 2.5%
D. 2.9%
E. None of the above
5. If inflation causes both cost and income to increase by 10%, then
you would expect profits to
A. be unchanged.
B. increase 10%.
C. decrease by 10%.
D. Not enough information given
E. None of the above
6. How many fluid ounces are in a gallon?
A. 64
B. 100
C. 128
D. 225
E. None of the above
7. The net business profit for a year would be found on
A. the balance sheet.
B. the cash flow budget.
C. the income statement.
D. a partial budget.
E. All of the above
8. In analyzing a farm business, what would be the best action to
take 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
9. A cattle buyer purchases 35 head of steers which average 1,248
pounds for $78.50/cwt. He trucks them 282 miles to a slaughter plant
where he sells them on a carcass basis for $1.16 per pound. His
trucking and handling costs are $441. What average carcass weight
does he need in order to break even?
A. 799 pounds
B. 810 pounds
C. 826 pounds
D. 855 pounds
E. None of the above
10. Changes in price within a year, which tend to follow the same
pattern over time, are called
A. price cycle.
B. price seasonality.
C. price volatility.
D. price discrimination.
E. None of the above
11. A corn futures contract at the Chicago Board of Trade is for
A. 100 bushels
B. 1,000 bushels
C. 5,000 bushels
D. 10,000 bushels
E. None of the above
12. By contributing the maximum amount to a Roth IRA, a 40-year-old
farmer will reduce his taxable income by
A. $0.
B. $2,000.
C. $3,000.
D. $3,500.
E. None of the above
13. When a farmer borrows money to purchase land, he usually must
offer the title to the property as security until the debt has been
repaid. This credit instrument is commonly referred to as a
A. sales contract.
B. promissory note.
C. mortgage.
D. check.
E. None of the above
14. The "c" in "cwt" stands for
A. cut
B. cost
C. clear
D. 100
E. None of the above
15. If corn silage as fed contains 65% moisture and 2.6% protein,
the dry matter would be what percent protein?
A. 4.00
B. 5.71
C. 6.86
D. 7.43
E. None of the above
16. The main difference between a joint tenancy and a tenancy in
common is
A. the surviving joint tenant will eventually own all of
the land as a result of the right of survivorship.
B. the surviving tenant in common will eventually own all
the land as a result of the right of survivorship.
C. only husbands and wives may be joint tenants.
D. tenants in common must own equal shares of the property
while joint tenants may own unequal shares
(i.e., H owns 1/4 and W owns 3/4).
E. None of the above
17. What USDA agency administers income support programs for crop
farmers?
A. NASS
B. AMS
C. ERS
D. FSA
E. None of the above
18. The type of life insurance which provides protection for a
limited time and is cheapest per dollar of protection is called
A. whole life.
B. term.
C. endowment.
D. new life.
E. universal life.
19. A cash-crop farmer is able to cash rent a neighboring 100 acres
of cropland for $70 an acre to farm with his own 400 acres. He does
not plan to purchase any additional equipment to handle the additional
acreage. The effect on his costs will be mainly
A. to increase fixed costs per unit of production.
B. to decrease fixed costs per unit of production.
C. to increase variable costs per unit of production.
D. to decrease variable costs per unit of production.
E. Both B and D
20. The maximum amount that can be claimed as a Section 179 expense
deduction on your 2005 tax return is
A. $17,500.
B. $20,000.
C. $100,000.
D. $105,000.
E. None of the above
21. A borrower putting up collateral in getting a loan is
A. promising to pay a set amount each period.
B. promising property to back up the loan.
C. requesting a self-liquidating loan.
D. requesting a risk premium on the loan.
E. None of the above
22. The increase in wheat yield becomes smaller for each additional
10 pounds of nitrogen fertilizer applied after 30 pounds per acre have
been applied. This is an example of
A. increasing marginal returns.
B. unprofitable use of fertilizer.
C. diminishing marginal physical product.
D. stage 3 of production.
E. None of the above
23. The letters "LLC" after a business name indicate that it is a
A. Licensed Legal Contractor.
B. Legally Licensed Company.
C. Limited Liability Company.
D. Limited Leverage Corporation.
E. None of the above
24. Dryland corn has an expected yield of 145 bushels per acre and
has a production cost of $250.00 per acre. Expected market prices are
$2.25 per bushel for corn and $6.00 per bushel for soybeans. Soybeans
can be raised at a production cost of $150 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. 37.7 bushels
D. 42.0 bushels
E. None of the above
25. A farmer is "liquid" if
A. he has sufficient current assets to cover current
debts.
B. he has sufficient equity to cover current debts.
C. he has sufficient assets to cover all debts.
D. he can pay all debts with all equity.
E. All of the above
26. Average corn yields have historically increased at an annual
rate of 2%. If the current average is 150 bushels per acre, what do
we expect the average yield to be in 5 years if it continues to grow
at this rate?
A. 160.0 bu./acre
B. 165.0 bu./acre
C. 165.6 bu./acre
D. 170.2 bu./acre
E. None of the above
27. A producer sells 6 feeder steers for $120/cwt. The average
weight per steer is 600 pounds. There is a 2.5% sales commission
and yardage fees of $2.50 per head. The net amount received for the
pen of steers would be
A. $4,197.00
B. $4,240.80
C. $4,618.00
D. $4,770.45
E. None of the above
28. Which of the following categories is not listed in a cash flow
plan?
A. Depreciation expense
B. Capital expense
C. Capital purchases
D. Operating expenses
E. None of the above
29. If the price of a September Put option is higher today than
yesterday, then one would expect the price of a September futures
contract to be
A. higher today than yesterday.
B. lower today than yesterday.
C. unchanged from yesterday.
D. either up or down. There is no relationship between
futures prices and prices of options
E. None of the above
30. A firm should shut down in the short-run if it cannot cover its
A. fixed costs.
B. total costs.
C. variable costs.
D. time costs.
E. overhead costs.
31. A decline in the value of total farm assets will
A. increase the rate of return to equity.
B. increase the rate of return to assets.
C. increase the capital turnover ratio.
D. all of the above.
E. None of the above
32. How many pounds of 48% protein supplement must be mixed with 8%
protein corn to make a ton of 14% protein feed?
A. 300 pounds
B. 400 pounds
C. 550 pounds
D. 600 pounds
E. None of the above
33. M. I. Doingood has a net worth of $200,000 and liabilities of
$200,000. The return to farm assets is $20,000. What is the rate of
return on investment?
A. 5%
B. 10%
C. 20%
D. 30%
E. None of the above
34. A farmer purchases 750-pound feeder steers for $1.05 per pound
and plans to sell the steers at 1200 pounds. The farmer estimates the
total cost of gain to be $0.53 per pound. The nearest breakeven price
when the steers are sold at 1200 pounds is
A. $0.705/pound.
B. $0.734/pound.
C. $0.767/pound.
D. $0.855/pound.
E. None of the above
35. Marginal revenue and marginal cost are useful concepts in
determining the profit maximizing output level. Profit will be at its
maximum level
A. where marginal revenue is at its maximum level and
marginal cost is 0.
B. where marginal revenue is 0 and marginal cost is at its
maximum.
C. where marginal revenue equals marginal cost.
D. where marginal revenue is at its minimum and marginal
cost is at its maximum.
E.
36. A soybean producer decides to store his soybeans in the local
elevator for 5 months. The price at harvest is $6.00 per bushel and
the elevator charges 2 cents per bushel per month for storage plus a 5
cent 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. $6.21
B. $6.24
C. $6.29
D. $6.35
E. None of the above
For questions 37-38, assume that Herbicide A is used only on Crop X,
Herbicide B is used only on Crop Y.
37. If the price of Crop Y increases, the demand for Herbicide B
will
A. increase.
B. decrease.
C. stay the same.
38. If Crops X and Y are substitutes, an increase in the price of
Herbicide B would cause the demand for Herbicide A to
A. increase.
B. decrease.
C. not be affected.
D. reverse.
E. stabilize.
39. If the supply of an output is inelastic, a large change in the
price of the output would produce _______________ change in the
quantity supplied?
A. a larger
B. a smaller
C. no
D. the same
E. an indeterminate
40. If supply of an input is inelastic, a large change in the price
of the output produced with theinput would produce _____________
change in the quantity of the input supplied.
A. a larger
B. a smaller
C. no
D. the same
E. an indeterminate
41. A price ceiling set below the equilibrium price creates
A. shortages.
B. black markets.
C. surpluses.
D. A and B.
E. None of the above
Use the following information to answer questions 42-44.
Field efficiency accounts for failure to utilize the theoretical
operating width of the machine; time lost because of operator
capability and habits and operating policy; and field characteristics.
42. A farmer is pulling an implement 15 ft. wide at a speed of 4
miles per hour. The field efficiency of operation is 80%. How many
acres will be covered in one hour?
A. 4.90 acres
B. 5.18 acres
C. 5.82 acres
D. 7.27 acres
E. None of the above
43. How long does it take the farmer to till one acre?
A. 0.17 minutes
B. 5.82 minutes
C. 8.25 minutes
D. 10.31 minutes
E. None of the above
44. A farmer thinks investing in a GPS system will allow him to
cover 6 acres an hour. What does this mean his field efficiency will
be with GPS?
A. 78.5%
B. 82.5%
C. 85.0%
D. 87.75
E. None of the above
Use the following information to answer questions 45-50.
A farmer can produce a crop under contract and be guaranteed a return
of $100 per acre. If he does not produce the crop under contract,
there is a 50% chance he will make $150 per acre and a 50% chance he
will make only $50 per acre.
45. What are his expected returns per acre if he produces all the
crop under contract?
A. $0
B. $50
C. $100
D. $150
E. None of the above
46. What are his expected returns per acre if he produces half the
crop under contract and half the crop without a contract?
A. $0
B. $50
C. $100
D. $150
E. None of the above
47. What are his expected returns per acre if he produces all the
crop without a contract?
A. $0
B. $50
C. $100
D. $150
E. None of the above
48. A farmer who prefers to produce all his crop under a contract
would be considered
A. risk-averse.
B. risk-neutral.
C. risk-loving.
D. indifferent to risk.
E. None of the above
49. A farmer who prefers to produce none of his crop under a
contract would be considered
A. risk-averse.
B. risk-neutral.
C. risk-loving.
D. indifferent to risk.
E. None of the above
50. The returns for a farmer who produces his crop under a contract
as compared to a farmer who produces none of his crop under contract
would be
A. more variable.
B. less variable.
C. always higher.
D. always lower.
E. None of the above
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2006 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, 2006:
Land $600,000
House 110,000
Machinery and equipment 85,000
Cows 36,000
Calves 15,000
Accounts payable 5,100
Autos 32,000
Sows and boars 20,000
Market hogs 18,000
Checking and savings 12,250
Soybeans 9,000
Hog buildings 75,000
Feed and hay 7,510
Accounts receivable 2,500
Accrued interest owed 14,740
Accrued taxes owed 8,300
30-year land loan balance is $410,000.00
$20,500 plus interest is due March 1 of each year.
5-year tractor loan balance is $15,640.
$3,910 plus interest is due August 31 of each year.
15-year home loan balance is $66,000.
$500 plus interest is due each month.
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, 2006, was
A. $41,760
B. $61,760
C. $64,260
D. $84,260
E. None of the above
2. The total value of non-current assets was
A. $607,295
B. $958,000
C. $960,500
D. $1,022,260
E. None of the above
3. The total value of current liabilities was
A. $28,140
B. $48,640
C. $52,550
D. $53,050
E. None of the above
4. The total value of non-current liabilities was
A. $461,230
B. $466,730
C. $491,640
D. $519,780
E. None of the above
5. The net worth was
A. $502,480
B. $519,780
C. $958,000
D. $1,022,260
E. None of the above
6. The current ratio was
A. 0.71
B. 0.91
C. 1.10
D. 2.08
E. None of the above
7. The net working capital was
A. $5,710
B. $64,260
C. $496,770
D. $502,480
E. None of the above
PROBLEM II -- Enterprise Budget
Use the following alfalfa budget to answer Questions 8 through 16.
CORN FOR GRAIN, circular sprinkler system, 20" water, custom harvest
(combine & hauling), shallow electric 50' well, 30' lift, 900 gpm
________________________________________________________________________________
Operating Inputs Units Price Qty. Value Your Value
Corn seed Lbs. 1.90 21.30 $40.47 __________
Nitrogen (N) Lbs. 0.25 200.00 50.00 __________
Phosphate (P205 ) Lbs 0.21 50.000 10.50 __________
Custom harvest Acre 22.00 1.00 22.00 __________
Custom hauling Bu. 0.05 180.00 9.00 __________
Rent fert. spreader/ac. Ac 2.44 3.00 7.32 __________
Pre-plant insecticide Ac 22.80 1.00 22.80 __________
Post-plant insecticide Ac 21.60 1.00 21.60 __________
Pre-emerge herbicide Ac 17.34 1.00 17.34 __________
Post-emerge herbicide Ac 18.12 1.00 18.12 __________
Annual operating capital $ 0.10 75.00 7.50 __________
Machinery labor Hour 7.00 1.96 13.72 __________
Irrigation labor Hour 7.00 0.96 6.72 __________
Mach. fuel, lube, repairs $ 16.39 __________
Irrig. fuel, lube, repairs $ 39.00 __________
Total operating costs $302.48 __________
Fixed costs
Machinery: Amount Value
Interest at 10% 145.50 14.55 __________
Depr., taxes, insurance 16.89 __________
Irrigation equipment:
Interest at 10% 234.20 23.42 __________
Depr., taxes, insurance 26.00 __________
Total fixed costs 80.86 __________
Production Units Price Quantity Value
Corn Bu. 2.30 180.00 414.00 __________
Total receipts 414.00
Returns above total operating costs 111.52 __________
Returns above all specified costs 30.66 __________
________________________________________________________________________________
8. The return above total operating cost per acre is:
A. -$1.27
B. $79.59
C. $111.52
D. $360.00
E. None of the above
9. How many hours of labor are budgeted per acre?
A. 1.96
B. 2.92
C. 12.00
D. 17.52
E. None of the above
10. What is the total budgeted interest cost per acre?
A. $14.55
B. $37.97
C. $45.47
D. $379.70
E. None of the above
11. If a 50-pound bag of seed corn has 70,000 kernels, how many
seeds are being planted per acre?
A. 21,300
B. 29,820
C. 31,524
D. 31,950
E. None of the above
12. What is the total specified fertilization cost per acre? (ignore
cost of labor and operating capital)
A. $50.00
B. $55.50
C. $67.82
D. $250.00
E. None of the above
13. How many bushels of corn are required to cover the specified
irrigation costs per acre?
A. 32.38
B. 41.37
C. 47.09
D. 95.14
E. None of the above
14. What yield will cause returns above all specified costs to equal
zero?
A. 166.7 bu.
B. 175.1 bu.
C. 180.6 bu.
D. 182.5 bu.
E. None of the above
15. What will be the per acre returns above all specified costs if
one quarter of the crop must be given to the landlord for rent of the
land?
A. -$121.27
B. -$101.27
C. -$80.86
D. -$72.84
E. None of the above
16. If one quarter of the crop is given as rent, what price received
for corn will make the per acre receipts above all specified costs
equal zero?
A. $2.63
B. $2.71
C. $2.84
D. $3.04
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 August 15, 2005, Mark bought a new combine. Mark traded his old
combine which had a remaining book value of $12,610. Mark paid
$25,000 "down" and financed the remaining $75,000 over 3 years at 8%
interest. He elected to roll the remaining basis of his old combine
into the new one.
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 Mark does not expense any of the cost of the combine, then
2005 depreciation will be (use regular MACRS and mid-year convention)
A. $1,351.04
B. $4,029.54
C. $10,714.00
D. $12,065.04
E. None of the above
19. If Mark expenses $25,000 of the combine cost and uses the
mid-quarter convention and regular MACRS, then 1/1/06 remaining book
value will be
A. $32,040.34
B. $72,649.33
C. $80,569.66
D. $111,443.36
E. None of the above
20. If Mark expenses the maximum allowable on the combine and uses
regular MACRS with the mid-year convention, then 1/1/06 remaining book
value will be
A. $0
B. $11,258.96
C. $80,569.66
D. $103,223.46
E. None of the above
21. If Mark does not claim an expense deduction and uses the
mid-year convention and straight line depreciation over the alternate
MACRS life, his 2005 depreciation will be
A. $630.50
B. $1,880.50
C. $5,000.00
D. $5,630.50
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
2006 Missouri FFA Farm Management Graph for Exam
The above graph represents the supply of wheat (S), the demand for
wheat in the U.S. (DUS), the demand for wheat for export
(DF), and the total demand of for wheat (DT).
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. P5
For Questions 27 and 28, include foreign demand and assume higher
yields per acre cause the supply to increase from S to S1
27. The increased supply of wheat should cause wheat demand to
A. shift to the left and up.
B. shift to the right and down.
C. not change.
D. None of the above
28. Higher wheat yield would cause
A. exports of wheat to go up.
B. the equilibrium price of wheat to go down.
C. Both of the above
D. the foreign demand for wheat to shift left.
E. None of the above
PROBLEM V - Marketing
On March 10, a farmer buys 200 head of feeder pigs. He sells them as
slaughter hogs on August 5. Ignore commissions, and interest.
March 10 quotes: August 5 quotes:
August futures price = $67.50 August futures price = $70.10
Expected basis = $1.00 under the board Basis = $1.20 under the board
Strike ---- Premiums ---- ---- Premiums ----
price Call Put Call Put
$66.00 $6.05 $1.55 $4.80 $0.20
$68.00 $4.35 $1.95 $2.95 $1.22
$70.00 $2.70 $3.85 $1.35 $2.50
$72.00 $1.40 $5.75 $0.85 $4.11
$74.00 $0.27 $7.60 $0.12 $5.95
29. What is the cash price ($/cwt. of carcass weight) of slaughter
hogs on August 5?
A. $66.50
B. $68.90
C. $70.10
D. $71.30
E. None of the above
30. If the farmer sold a futures contract on March 10 and bought
back the contract on August 5, what would be the realized price per
hundredweight (cash + net on futures) for these hogs?
A. $66.30
B. $68.90
C. $70.10
D. $71.50
E. None of the above
31. If the farmer bought a $68.00 Put on March 10 and sold the Put
on August 5, what would be the realized price per hundredweight (cash
+ net on options) for his hogs?
A. $68.17
B. $68.90
C. $69.63
D. $70.10
E. None of the above
32. If the farmer bought a $68.00 Put and sold a $68.00 Call on
March 10, 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. $68.17
B. $68.23
C. $68.90
D. $69.57
E. None of the above
33. Given all the information in Problem V, which of the following
actions taken on March 10 turned out to be the most profitable?
A. Selling a futures contract.
B. Buying a $68 Put option.
C. Buying a $68 Put and selling a $68 Call.
D. Taking no market action.
PROBLEM VI - Inflation
The table below shows average nominal commodity prices and the
Consumer Price Index (1967=100) for various years. Use this data to
answer questions 34-38.
Year CPI Corn Hogs Steers
Oil
$/bu. $/cwt. $/cwt.
$/barrel
2005 585.0 2.05 46.65 87.28 49.05
2000 515.8 1.82 42.41 69.65 26.73
1995 456.5 2.26 41.75 66.25 14.62
1990 391.4 2.36 54.55 77.40 20.03
1985 322.2 2.62 44.50 58.37 24.09
1975 161.2 3.02 48.32 41.89 7.67
1970 116.3 1.16 21.95 29.36 3.18
1967 100.0 1.24 19.37 25.29
1965 94.5 1.17 21.30 24.99
1960 88.7 1.04 15.96 25.09
1955 80.2 1.43 15.19 22.16
1950 71.1 1.24 18.52 28.88
34. What price would a bushel of corn have needed to be in 2005 to
have the same inflation adjusted price as in 1967?
A. $7.25
B. $6.40
C. $5.16
D. $4.81
E. None of the above
35. What price would a barrel of oil have needed to be in 2005 to
have the same inflation adjusted price as 1970?
A. $15.59
B. $16.00
C. $17.03
D. $18.60
E. None of the above
36. Which of these four commodities did the poorest job of keeping
up with inflation between 1970 and 2005?
A. Corn
B. Hogs
C. Steers
D. Oil
E. None of the above
37. Adjusted for inflation, corn prices were highest in
A. 1950
B. 1955
C. 1975
D. 2000
E. None of the above
38. Adjusted for inflation, hog prices were lowest in
A. 1955.
B. 1970.
C. 1995
D. 2005.
E. None of the above
PROBLEM VII - Farm Bill Support Payments
The loan rate for wheat is $2.75 per bushel.
The CCP trigger price for wheat is $3.34 per bushel.
The target price for wheat is $3.86 per bushel.
For questions 39-44 assume:
Diane finishes her wheat harvest on June 28, 2005. She harvested
10,000 bushels and put them in on-farm storage. The posted county
price for wheat is $2.60 on June 28, $2.70 on October 21, and $2.80 on
December 19.
39. If Diane elects to claim her Loan Deficiency Payment on June 28,
she will receive
A. $0
B. $0.05/bushel
C. $0.15/bushel
D. $0.74/bushel
E. None of the above
40. If Diane elects to claim her Loan Deficiency Payment on October
21, she will receive
A. $0
B. $0.05/bushel
C. $0.15/bushel
D. $0.64/bushel
E. None of the above
41. If Diane elects to claim her Loan Deficiency Payment on October
21, she will receive her LDP payment for
A. 10,000 bushels
B. 85% of 10,000 bushels
C. 78% of 10,000 bushels
D. 78% of her farm's historic base production
E. None of the above
42. Diane will be able to collect a counter-cyclical payment if
A. the posted county price in December averages the loan
rate.
B. the seasonal average price is under the trigger price.
C. the seasonal average price is under the target price.
D. the seasonal average price is above the trigger price.
E. None of the above
43. The fixed payment is the difference between
A. the posted county price and the loan rate.
B. the loan rate and the CCP trigger price.
C. the CCP trigger price and the target price.
D. the loan rate and the target price.
E. None of the above
44. Diane will not receive a fixed payment if
A. the posted county price is above the loan rate.
B. the seasonal average price is above the trigger price.
C. the seasonal average price is above the target price.
D. her farm does not have a wheat acreage base.
E. None of the above
PROBLEM VIII - Cost Analysis
A local business can produce up to 7 widgets per hour. The partially
completed table below shows some of their cost data. Complete the
cost table then answer questions 45-50. Round all numbers to the
nearest tenth.
Quantity Total Fixed Variable Average Average Average Marginal
Cost Cost Cost Total Fixed Variable Cost
Cost Cost Cost
0 -- -- -- --
1 A 5
2 50 10
3 6 F
4 B D 9
5 80 E
6 56 C
7 17
45. What is the value of A?
A. 25
B. 30
C. 40
D. 50
E. None of the above
46. What is the value of B?
A. 62
B. 67
C. 70
D. 72
E. None of the above
47. What is the value of C?
A. 16
B. 18
C. 20
D. 22
E. None of the above
48. What is the value of D?
A. 5.0
B. 6.7
C. 10.0
D. 16.7
E. None of the above
49. What is the value of E?
A. 4
B. 5
C. 6
D. 8
E. None of the above
50. What is the value of F?
A. 6
B. 8
C. 10
D. 12
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.
Key
2006 STATE FFA FARM MANAGEMENT CONTEST
Revised 8/06/06
Multiple Choice
1. D 11. C 21. B 31. D 41. D
2. C 12. A 22. C 32. A 42. C
3. D 13. C 23. C 33. A 43. D
4. D 14. D 24. C 34. D 44. B
5. B 15. D 25. A 35. C 45. C
6. C 16. A 26. C 36. D 46. C
7. C 17. D 27. A 37. A 47. C
8. B 18. B 28. A 38. A 48. A
9. D 19. B 29. B 39. B 49. C
10. B 20. D 30. C 40. B 50. B
Problems
1. C 11. B 21. D 31. A 41. A
2. B 12. C 22. B 32. D 42. B
3. E 13. B 23. D 33. C 43. C
4. A 14. A 24. B 34. A 44. D
5. A 15. D 25. A 35. B 45. C
6. C 16. C 26. B 36. A 46. B
7. A 17. C 27. C 37. C 47. A
8. C 18. D 28. C 38. D 48. C
9. B 19. C 29. B 39. C 49. D
10. C 20. B 30. A 40. B 50. B