2011 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. A farmer purchases 500-pound feeder steers for $1.50 per pound and plans to sell the
steers at 750 pounds. The farmer estimates the total cost of gain to be 94 cents per pound.
The nearest breakeven price when the steers are sold at 750 pounds is
A. $114.16/cwt.
B. $120.46/cwt.
C. $131.33/cwt.
D. $141.16/cwt.
E. None of the above
2. If grain sorghum has 97% of the feeding value of corn on a pound-for-pound basis and
corn is selling for $6.25 per bushel, then a hundredweight of grain sorghum is worth
A. $6.06
B. $8.66
C. $10.83
D. $11.16
E. None of the above
3. Corn has an expected yield of 155 bushels per acre and a production cost of $400.00 per
acre. Expected market prices are $6.00 per bushel for corn and $12.00 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 corn?
A. 34.3 bushels
B. 45.3 bushels
C. 50.3 bushels
D. 56.7 bushels
E. None of the above
4. A soybean producer decides to store his soybeans in the local elevator for 6 months. The
price at harvest is $11.00 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 $55,000 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. $11.12
B. $11.07
C. $11.61
D. $12.86
E. None of the above
5. How many pounds of 48% protein soybean meal must be mixed with 10% protein wheat
to make a ton of 15% protein feed?
A. 263 pounds
B. 305 pounds
C. 389 pounds
D. 427 pounds
E. None of the above
6. How many total acres are included in the "S 1/2 of the NW 1/4 and E 1/2 of the NE 1/4 of
the SW 1/4 of Section 15, Twp. 10N, R4W of the 5th Principle Meridian"?
A. 80 acres
B. 100 acres
C. 120 acres
D. 160 acres
E. None of the above
7. 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
8. A acre equals
A. 0.40 hectares
B. 0.74 hectares
C. 2.47 hectares
D. 5.05 hectares
E. None of the above
9. A farmer who wants a real rate of return on his investment of 5% will use what discount
rate if he anticipates inflation of 2% per year?
A. 2%
B. 3%
C. 5%
D. 7%
E. None of the above
10. An increase in the rate of inflation, everything else equal, will have what impact on the
present value of a future stream of income?
A. No impact
B. Increase the present value
C. Decrease the present value
D. Cannot tell
E. None of the above
11. The process of finding the present value of a dollar to be received in the future is known as
A. compounding.
B. discounting.
C. forwarding.
D. ratio analysis.
E. None of the above
12. Fred Brown raises corn and feeds it to his hogs. This type of business structure is an
example of
A. vertical integration.
B. horizontal integration.
C. supply company.
D. marketing cooperative.
E. None of the above
13. If the price of a commodity is too low, the demand will be greater than the supply
resulting in a
A. surplus.
B. boycott.
C. monopoly.
D. shortage.
E. None of the above
14. A farmer placed too high a value on his land in his closing inventory while all other
records were accurate. Net working capital in his record summary is
A. too high.
B. too low.
C. not affected.
D. fixed.
E. None of the above
15. When the size of the soybean harvest exceeds locally available farm and elevator storage,
what happens to the basis?
A. Basis narrows.
B. Basis widens.
C. Basis goes out of existence.
D. Basis is usually the same all year long.
E. None of the above
16. The money you must deposit with a broker to insure performance in order to trade in the
futures market is called
A. basis.
B. margin.
C. commission.
D. spread.
E. None of the above
17. The short-run supply curve for a firm is identical to
A. average variable cost.
B. average fixed cost.
C. average total cost.
D. marginal cost.
E. None of the above
18. A farm business with declining average total costs has
A. increasing returns to size.
B. decreasing returns to size.
C. constant returns to size.
D. decreasing demand.
E. None of the above
19. Which of the following is not a type bankruptcy?
A. Chapter 7
B. Chapter 11
C. Chapter 12
D. Chapter 13
E. All are bankruptcy chapters
20. The maximum amount that a wife can inherit from her husband without owing any
federal estate tax is
A. $10,000.
B. $600,000.
C. $600,000 less excess gift tax.
D. unlimited.
E. None of the above
21. Many farmers do a considerable amount of custom work. Their reason for doing this is
A. to spread the fixed cost of their equipment over more acres.
B. to earn a return to under-utilized labor.
C. to help out their neighbors.
D. to supplement on-farm income.
E. All of the above
22. Using comparable sales for the purpose of appraising farmland is called the
A. inventory approach to appraising.
B. earnings approach to appraising.
C. market approach to appraising.
D. cost approach to appraising.
E. None of the above.
23. Other things equal, the value of land will be greatest to the farmer who has the
A. longest planning horizon.
B. shortest planning horizon.
C. highest discount rate.
D. lowest discount rate.
E. None of the above
24. A farmer has total assets of $600,000 of which land is $300,000. The farmer's debt:equity
ratio is 0.5. What will the farmer's debt:equity ratio be if the lender devalues the land by
25%?
A. .615
B. .701
C. .843
D. .901
E. None of the above
25. The farm return to land, labor, and capital 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. None of the above
26. Which of the following is considered Schedule F farm income?
A. Cull breeding stock
B. Crop sales
C. Sales of farm equipment
D. Sale of land
E. All of the above
27. For the rules of depreciation, which of the following is an example of "listed property"?
A. A home
B. A raised cow
C. A greenhouse
D. A passenger car
E. None of the above
28. An LLC (Limited Liability Company) is usually
A. taxed like a corporation.
B. taxed like a partnership.
C. not for profit and therefore not taxed.
D. illegal in Missouri.
E. None of the above
29. The main difference between cash and accrual accounting is that accrual accounting includes
A. a charge for unpaid family labor.
B. depreciation.
C. an adjustment for changes in inventory.
D. sales of assets.
E. None of the above
30. A farmer should issue an IRS Form 1099 for which of the following?
A. $750 paid to a neighbor for hay.
B. $500 paid to a neighbor for custom work.
C. $1500 paid to a neighbor for a bull.
D. $650 paid to a neighbor for land rent.
E. All of the above
31. When required, you must send an IRS Form 1099-MISC to IRS before
A. December 31.
B. January 31.
C. March 1.
D. April 15.
E. 90 days after payment.
32. The IRS form used to calculate self-employment tax is
A. Schedule D.
B. Form 4797.
C. Form 4562.
D. Schedule SE
E. None of the above
33. The USDA agency that administers the federal crop insurance program is the
A. Farm Service Agency
B. Risk Management Agency
C. Farm Crop Insurance Agency
D. Rural Development Agency
E. None of the above
34. Which is not a policy plan for multi-peril crop insurance?
A. Revenue Protection
B. Yield Protection
C. Management Protection
D. Revenue Protection with harvest price exclusion
E. None of the above
35. On a crop insurance policy, APH stands for
A. Adjusted Protection History
B. Accumulated Price History
C. Approximate Policy Hierarchy
D. Actual Production History
E. None of the above
36. What type of insurance protects the farmer from lawsuits if he/she is responsible for
personal injury or property damage to another person?
A. Life insurance
B. Property insurance
C. Accident insurance
D. Liability insurance
E. None of the above
37. Even though corn prices are at record levels, corn farmers still receive from USDA
A. direct payments.
B. loan deficiency payments.
C. counter-cyclical payments.
D. acreage protection payments.
E. None of the above
38. You are considering the purchase of a used combine, rather than continuing to hire a custom
operator at $22.00 per acre. If you purchase the machine, the annual fixed costs (interest,
depreciation, etc.) will be $15,000. The variable cost is $10 per acre including the extra
labor. There would be no other changes in costs and returns associated with ownership and
no savings other than the custom charges. How many acres must be harvested each year in
order to justify (on a breakeven basis) purchasing the combine?
A. 500
B. 833.3
C. 1,000
D. 1,250
E. None of the above
39. Which of the following should not affect a farmer's decision to store his crop?
A. Interest rates
B. Shrinkage during storage
C. Anticipated price in the future
D. What he paid for his grain bin
E. None of the above
40. On April 1, 2010, Janice borrowed $10,000 to plant corn. On December 1, 2010, she repaid
the $10,000 along with $716.67 interest. What annual interest rate did she pay?
A. 7.17%
B. 10.75%
C. 12.25%
D. 14.34%
E. None of the above
Use the following information to answer questions 41-44
A farmer can produce a crop under contract and be guaranteed a return of $95 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 $60 per acre.
41. What are his expected returns per acre if he produces all the crop under contract?
A. $95
B. $100
C. $105
D. $150
E. None of the above
42. What are his expected returns per acre if he produces half the crop under contract and half
the crop without a contract?
A. $100
B. $105
C. $110
D. $150
E. None of the above
43. What are his expected returns per acre if he produces all the crop without a contract?
A. $100
B. $105
C. $110
D. $150
E. None of the above
44. A farmer who prefers to produce all his crop under contract would be considered
A. risk averse.
B. risk neutral.
C. risk loving.
D. risk indifferent.
E. None of the above
45. 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
46. 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
47. Crop prices increase, causing Marcia's sales income to increase while leaving her cash
operating expenses unchanged. This will cause her capital turnover to
A. increase.
B. decrease.
C. not change.
D. Any of the above
E. None of the above
48. 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 will be in 5 years if it
continues to grow at this rate?
A. 165.0 bushels
B. 165.6 bushels
C. 167.3 bushels
D. 170.2 bushels
E. None of the above
49. What would you expect average corn yields to have been 5 years ago? (see Quest. 48)
A. 131.8 bushels
B. 134.7 bushels
C. 135.0 bushels
D. 135.9 bushels
E. None of the above
50. The carcass weight of a hog usually averages 76% of the live weight at the time of slaughter.
If it costs 60 cents per pound to raise a hog to slaughter, what is the breakeven carcass price?
A. $61.80/cwt.
B. $68.20/cwt.
C. $72.37/cwt.
D. $78.94/cwt.
E. None of the above
---------------------------------------------------------------------------------------------------
2011 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, 2011:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . $750,000
House . . . . . . . . . . . . . . . . . . . . . . . . . . . 140,000
Machinery and equipment. . . . . . . . . . . . . . . . . . . 141,000
Cows . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Calves . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,000
Accounts payable . . . . . . . . . . . . . . . . . . . . . . 7,652
Autos . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,400
Sows and boars . . . . . . . . . . . . . . . . . . . . . . . 22,000
Market hogs . . . . . . . . . . . . . . . . . . . . . . . . 65,000
Checking and savings . . . . . . . . . . . . . . . . . . . . 17,761
Soybeans . . . . . . . . . . . . . . . . . . . . . . . . . . 9,900
Hog buildings . . . . . . . . . . . . . . . . . . . . . . . 130,000
Feed and hay . . . . . . . . . . . . . . . . . . . . . . . . 10,150
Accounts receivable. . . . . . . . . . . . . . . . . . . . . 12,500
Accrued interest owed. . . . . . . . . . . . . . . . . . . . 23,175
Accrued taxes owed . . . . . . . . . . . . . . . . . . . . . 7,700
30-year land loan balance is $410,000.
$20,500 plus interest is due March 1 of each year.
5-year combine loan balance is $64,400.
$16,110 plus interest is due August 31 of each year.
20-year home loan balance is $59,500.
$3,500 plus interest is due each 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, 2011, was
A. $130,311
B. $152,311
C. $170,311
D. $179,811
E. None of the above
2. The total value of non-current assets was
A. $1,115,400
B. $1,137,400
C. $1,155,400
D. $1,262,400
E. None of the above
3. The total value of current liabilities was
A. $19,820
B. $58,347
C. $60,847
D. $78,637
E. None of the above
4. The total value of non-current liabilities was
A. $325,500
B. $338,000
C. $493,790
D. $533,900
E. None of the above
5. The net worth was
A. $842,284
B. $880,260
C. $1,177,400
D. $1,207,711
E. None of the above
6. The current ratio was
A. 0.30
B. 0.52
C. 1.94
D. 2.37
E. None of the above
7. If total assets on 1/1/10 were $1,256,749, what would the 2010 value of farm
production need to be in order to have a capital turnover ratio of 0.4?
A. $534,292.00
B. $565,884.40
C. $601,219.50
D. $2,144,835.00
E. None of the above
PROBLEM II -- Enterprise Budget
Use the following hog budget to answer Questions 8 through 16.
600 SOW CONFINEMENT SYSTEM, FARROW TO FINISH (per sow),
complete feed mill
_____________________________________________________________________________________________
Operating Inputs Units Price Qty. Value Your Value
Starter ration Cwt. $25.00 12.21 $305.25 __________
Corn Bu. 5.00 250.00 1250.00 __________
41-45% protein supple. Cwt. 16.00 31.66 506.56 __________
Base mix Cwt. 30.00 5.15 154.50 __________
Young boars Hd. 800.00 0.028 22.40 __________
Utilities Hd. 100.00 1.00 100.00 __________
Trucking Hd. 3.00 22.39 67.17 __________
Vet. medicine Hd. 3.20 22.39 71.65 __________
Young sows Hd. 200.00 0.77 154.00 __________
Annual operating capital % 0.080 891.55 71.32 __________
Livestock labor Hour 9.00 22.00 198.00 __________
Mach. fuel, lube, repair Dol. 66.44 __________
Equip. fuel, lube, repair Dol. 37.78 __________
Total operating costs $3005.07 __________
Fixed costs
Machinery: Amount Value
Interest at 8% $485.00 $38.80 __________
Depr., taxes, insurance 51.95 __________
Equipment:
Interest at 8% 1244.27 99.54 __________
Depr., taxes, insurance 205.51 __________
Livestock
Sow 300.00
Boar 15.00
Interest at 8% 315.00 25.20
Total fixed costs $421.00 __________
Production Units Price Qty Value
Slaughter hogs Cwt. $60.00 52.00 $3120.00 __________
Non-breeder gilts Cwt. 55.00 0.32 17.60 __________
Sows Cwt. 50.00 2.43 121.50 __________
Boar Cwt. 35.00 0.14 4.90 __________
Total receipts $3264.00 __________
Returns above total operating costs $258.93 __________
Returns above all specified costs - 162.07 __________
_____________________________________________________________________________________________
8. Total operating cost per sow is:
A. $258.93
B. $421.00
C. $3,005.07
D. $3,264.00
E. None of the above
9. The return above total operating cost per sow is:
A. -$162.07
B. $258.93
C. $3,005.07
D. $3,264.00
E. None of the above
10. How many hours of labor are budgeted per sow?
A. 9.00
B. 22.00
C. 50.75
D. 198.00
E. None of the above
11. What is the total budgeted interest cost per sow?
A. $99.54
B. $138.34
C. $209.66
D. $234.86
E. None of the above
12. What price per ton is paid for corn?
A. $5.00
B. $178.57
C. $250.00
D. $305.25
E. None of the above
13. What are feed costs per sow? (ignore cost of operating capital)
A. $730.25
B. $1,142.16
C. $1,276.20
D. $2,216.31
E. None of the above
14. If the price paid for all feed decreases by 20%, what will be the per sow returns
above all specified costs? (ignore changes in the cost of operating capital)
A. $98.56
B. $281.19
C. $443.26
D. $702.19
E. None of the above
15. How much will total costs per sow decrease if interest rates drop to 6%?
A. $4 to $5
B. $58 to $59
C. $92 to $93
D. $175 to $177
E. None of the above
16. If purchased boars weigh 300 pounds and purchased replacement sows weigh 200
pounds, what is the whole herd feed conversion?
A. 3.53
B. 3.55
C. 3.60
D. 3.65
E. None of the above
PROBLEM III -- Income Tax Management
In December 2010, cash basis farmer G. T. Leavenworth estimates his adjusted gross income
for the year at $90,000. This will give him marginal tax rates of 28% on federal income tax,
12.4% on Social Security, 2.9% on Medicare, and 6% on the Missouri income tax. He will
not itemize on his federal or state tax returns.
17. He has some soybeans stored which he is considering selling. If he sells in
December, it will increase his 2010 net farm income by $10,000. How much will
this add to his self-employment tax obligation? (Hint: Only 92.35% of self-
employment income is subject to the Social Security and Medicare tax.)
A. $0, he has reached the maximum
B. $960.81
C. $1,046.51
D. $1,412.95
E. None of the above
18. If he sells the beans, how much will it add to his federal income tax obligation.
(Hint: 50% of his self-employment taxes are deductible on the federal income tax
form.)
A. $2,481.01
B. $2,517.16
C. $2,602.19
D. $2,665.49
E. None of the above
19. If he sells the beans, how much will it add to his Missouri income tax obligation?
(Hint: Federal income taxes are a deduction on the Missouri income tax form.)
A. $425.19
B. $430.65
C. $440.07
D. $443.87
E. None of the above
20. What is G. T.'s marginal tax rate? (Hint: How much of the $10,000 in soybeans
went to pay taxes?)
A. 38%
B. 41%
C. 45%
D. 59%
E. None of the above
21. The maximum Section 179 expensing deduction for 2009 and 2010 was
A. $10,000
B. $50,000
C. $200,000
D. $500,000
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
(See graph in separate file)
The above graph represents supply of beef for import into the U.S. (SF) the supply of beef
produced in the U.S. (SUS), the total supply of beef in the U.S. (ST), the foreign demand for
U.S. beef (DF), the domestic demand for beef (DUS), and the total demand for beef (DT) in the
U.S.
23. What is the market equilibrium price of beef 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 beef will be exported from the U.S.?
A. Q1
B. Q2
C. Q3
D. Q4
E. Q5
25. At the market equilibrium price, how much beef will be imported into the U.S.?
A. Q1
B. Q2
C. Q3
D. Q4
E. Q5
26. At what price would beef imports equal beef exports?
A. P1
B. P2
C. P3
D. P4
E. None of the above
For questions 27 and 28, assume an outbreak of foot and mouth disease in Australia (the
world's largest beef exporter) causes an increase in foreign demand for U.S. beef and a drop
in U.S. beef imports..
27. The change will cause the U.S. market equilibrium price to
A. increase.
B. decrease.
C. not change.
D. None of the above
28. After the Australian FMD outbreak, U.S. beef exports should
A. increase.
B. decrease.
C. stay the same.
D. None of the above
PROBLEM V - Marketing
On November 10, a farmer has 5,000 bushels of soybeans in his bins. He sells them on April 5.
Ignore commissions, storage cost, and interest.
November 10 quotes: April 5 quotes:
May futures price = $11.80 May futures price = $12.75
Expected basis = $0.10 under the board Basis = $0.05 over the board
Strike -- Premiums -- -- Premiums --
price Call Put Call Put
$11.75 $0.35 $0.30 $1.52 $0.01
$12.00 $0.20 $0.50 $1.27 $0.02
$12.25 $0.10 $0.72 $1.02 $0.03
$12.50 $0.05 $0.96 $0.78 $0.05
$12.75 $0.02 $1.21 $0.55 $0.10
$13.00 $0.01 $1.46 $0.35 $0.20
29. What is the cash price of soybeans on April 5?
A. $11.70
B. $12.70
C. $12.75
D. $12.80
E. None of the above
30. If the farmer sold a futures contract on November 10 and bought back the contract on
April 5, what would be the realized price per bushel (cash + net on futures) for these
soybeans?
A. $11.75
B. $11.85
C. $13.55
D. $13.75
E. None of the above
31. If the farmer bought a $12.00 Put on November 10 and sold the Put on April 5, what
would be the realized price per bushel (cash + net on options) for his soybeans?
A. $12.22
B. $12.32
C. $13.08
D. $13.28
E. None of the above
32. If the farmer bought a $12.00 Put and sold a $12.00 Call on November 10, and sold
the Put and bought back the Call on April 5, what would be the realized price per
bushel (cash + net on options) for his beans?
A. $11.25
B. $11.57
C. $11.85
D. $12.40
E. None of the above
33. Given all the information above, which of the following actions taken on November
10 turned out to be the most profitable?
A. Selling a futures contract.
B. Buying a $7 Put option.
C. Buying a $7 Put and selling a $7 Call.
D. Taking no market action.
PROBLEM VI - 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 34-40. Round
all numbers to the nearest tenth.
: : : : : Average: Average: Average : :
: Quantity : Total : Fixed : Variable: Total : Fixed : Variable: Marginal :
: : Cost : Cost : Cost : Cost : Cost : Cost : Cost :
:..........:........:........:.........:........:........:.........:..........:
: 0 : : : : -- : -- : -- : -- :
:..........:........:........:.........:........:........:.........:..........:
: 1 : : A : : : : : 8 :
:..........:........:........:.........:........:........:.........:..........:
: 2 : 46 : : 16 : : : : :
:..........:........:........:.........:........:........:.........:..........:
: 3 : : : : : : 9 : F :
:........ .:........:........:.........:........:........:.........:..........:
: 4 : B : : : : D : : 11 :
:..........:........:........:.........:........:........:.........:..........:
: 5 : 80 : : : : : E : :
:..........:........:........:.........:........:........:.........:..........:
: 6 : : : 66 : C : : : :
:..........:........:........:.........:........:........:.........:..........:
: 7 : : : : 16.3 : : : :
:..........:........:........:.........:........:........:.........:..........:
34. What is the value of A?
A. 25
B. 30
C. 40
D. 50
E. None of the above
35. What is the value of B?
A. 62
B. 68
C. 70
D. 72
E. None of the above
36. What is the value of C?
A. 16
B. 18
C. 20
D. 22
E. None of the above
37. What is the value of D?
A. 5.0
B. 6.7
C. 7.5
D. 16.7
E. None of the above
38. What is the value of E?
A. 9
B. 9.5
C. 10
D. 11
E. None of the above
39. What is the value of F?
A. 6
B. 8
C. 11
D. 12
E. None of the above
40. If the business sells widgets for $17 each, how many should it produce per hour in order
to maximize profits?
A. 3
B. 4
C. 5
D. 6
E. None of the above
PROBLEM VII - Diminishing Returns
A farmer is looking at a precision ag firm that can apply fertilizer in 10 lb. increments. The cost
of fertilizer is $0.55/lb. Corn is selling for $5.00 per bushel. He has one field that is a mix of
Soils A and B. The field is 80 acres with 50 acres of Soil A and 30 acres of Soil B. He has
determined that his yields will respond according to the following table.
Fertilizer Soil A yld. Soil B yld.
lbs./ac. bu./ac. bu./ac.
120 120 140
130 125 148
140 128 154
150 130 158
160 131 161
170 132 163
41. How much fertilizer should he apply per acre if he fertilizes the entire field based on Soil
Type A?
A. 140 lbs.
B. 150 lbs.
C. 160 lbs.
D. 170 lbs.
E. None of the above
42. What are his net returns above fertilizer cost for the entire field if he fertilizes the entire
field based on Soil A?
A. $45,400
B. $49,600
C. $52,970
D. $56,200
E. None of the above
43. How much fertilizer should he apply per acre if he fertilizes the entire field based on Soil
Type B?
A. 140 lbs.
B. 150 lbs.
C. 160 lbs.
D. 170 lbs.
E. None of the above
44. What are his net returns above fertilizer cost for the entire field if he fertilizes the entire
field based on Soil B?
A. $42,450
B. $47,480
C. $49,970
D. $57,450
E. None of the above
45. What are his net returns above fertilizer cost for the entire field if he fertilizes by applying
the profit maximizing amount on each soil type?
A. $49,785
B. $50,020
C. $52,825
D. $56,950
E. None of the above
46. What are his net returns above fertilizer cost for the entire field if he applies 160 pounds
per acre on all 100 acres?
A. $49,690
B. $49,750
C. $49,860
D. $49,970
E. None of the above
PROBLEM VIII - Partial Budgeting
Frank Frogfarmer is having financial problems with his farm being able to provide the level of net
income desired. He is considering switching a cow-calf enterprise to a stocker enterprise. Having
successfully completed four years of Agricultural Education in Snake Navel High School, this
enterprising young rancher decided to use a partial budget technique to determine if the change
should be made.
He estimated he would have a 2% death loss which would allow him to sell 196 head of yearlings
weighing 750 pounds each at $120 per hundredweight. Total labor associated with the yearling
enterprise is $4,200. He estimated feeder calves would cost $700/head and consume $1,800 of
supplemental feed. Interest charge on the investment associated with the yearling enterprise is
$3,900. He must purchase a $3,500 piece of new equipment for the yearling enterprise (figure
annual charges at 10% of purchase price).
Mr. Frogfarmer determined annual costs for the cow-calf enterprise to be:
(a) feed -- $3,600; (b) a replacement bull at $1,500/year; (c) labor -- $7,400; and (d) interest on
cow herd investment -- $6,000. In addition to a reduction in the previous listed costs associated
with the cow-calf herd, receipts would be reduced by $44,220 per year.
Frank has been selling $5,000 worth of hay each year and will continue to do so if he switches to a
stocker operation.
Use the lines below to determine if the change in enterprises should be made.
Additional Receipts:
Sale of yearlings 47. $___________
Reduced Costs:
Labor $____________
Feed ____________
Replacement bulls ____________
Interest ____________
Subtotal 48. $____________
Total of additional receipts and reduced costs $____________
Additional Costs:
Labor $____________
Feed ____________
Cattle purchases ____________
Equipment charges ____________
Interest ____________
Subtotal 49. $____________
Reduced Receipts:
Calves, cows, bulls $____________
Total additional costs and reduced receipts $____________
Net change in income 50. $____________
47. If Frank Frogfarmer makes the change to backgrounding feeder calves, his additional
receipts will be:
A. $23,520
B. $90,000
C. $153,670
D. $176,400
E. None of the above
48. Frank's reduced costs will be:
A. $11,400
B. $13,500
C. $18,500
D. $20,400
E. None of the above
49. The additional costs associated with this change are
A. $140,000
B. $150,250
C. $155,250
D. $157,350
E. None of the above
50. Net change in income will be
A. a gain of more than $1,000.
B. a gain of less than $1,000.
C. a loss of more than $1,000.
D. a loss of less than $1,000.
E. None of the above
------------------------------------------------------------------------------------------
2011 STATE FFA FARM MANAGEMENT CONTEST
Key
Multiple Choice
1. C 11. B 21. E 31. C 41. A
2. C 12. A 22. C 32. D 42. A
3. D 13. D 23. D 33. B 43. B
4. C 14. C 24. A 34. C 44. A
5. A 15. B 25. C 35. D 45. B
6. B 16. B 26. B 36. D 46. E
7. B 17. D 27. D 37. A 47. A
8. A 18. A 28. B 38. D 48. B
9. D 19. E 29. C 39. D 49. D
10. C 20. D 30. D 40. B 50. D
Problems
1. B 11. D 21. D 31. B 41. B
2. D 12. B 22. B 32. A 42. B
3. D 13. D 23. C 33. D 43. D
4. C 14. B 24. B 34. B 44. C
5. A 15. B 25. A 35. B 45. B
6. C 16. B 26. D 36. A 46. C
7. A 17. D 27. A 37. C 47. D
8. C 18. C 28. A 38. C 48. C
9. B 19. D 29. D 39. C 49. B
10. B 20. C 30. B 40. D 50. B
|
