2010 DISTRICT 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. Answers have
been rounded.
1. Corn has an expected yield of 150 bushels per acre and a production cost
of $300.00 per acre. Expected market prices are $3.50 per bushel for
corn and $9.00 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. 41.7 bushels
B. 42.3 bushels
C. 48.6 bushels
D. 53.6 bushels
E. None of the above
2. A farmer sold his 5000-bushel corn crop at several different times during
the year. He sold 1000 bushels at $3.50, 2000 bushels at $3.00, and 2000
bushels at $4.00. What was his average price per bushel?
A. $2.67
B. $3.00
C. $3.20
D. $3.50
E. None of the above
3. The self-employment tax rate for Medicare is
A. 1.45%
B. 2.90%
C. 5.30%
D. 7.65%
E. None of the above
4. A farmer purchases 800-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 $0.75 per pound. The nearest breakeven price when the
steers are sold at 1200 pounds is
A. $0.87 per pound
B. $0.90 per pound
C. $0.95 per pound
D. $0.97 per pound
E. None of the above
5. How many total acres are included in the "S 1/2 of the SW 1/4 and SE 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. The Kansas City Board of Trade wheat futures contract is for
A. hard red winter wheat.
B. hard red spring wheat.
C. soft ed winter wheat.
D. durum wheat.
E. None of the above
8. If the total cost of producing 100 units of output is $400 and the
average variable cost per unit is $3, 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 $3.
D. Average total cost is $3.
E. None of the above
9. Farmer Jones has less current assets than current liabilities.
current ratio is
A. negative.
B. zero.
C. between 0 and 1.
D. greater than 1.
E. None of the above
Her
10. Economists use elasticities to relate the percentage change in one
variable to the percentage change in another variable. The cross-price
elasticity of demand estimates the impact on the demand for a good with
respect to the change in the price of another good. A negative crossprice elasticity indicates the two goods are
A. substitutes.
B. complements.
C. inferior.
D. luxuries.
E. None of the above
11. The own-price elasticity of supply estimates the impact on the quantity
of a good supplied by a change in the price of the good. Normally, one
would expect the own-price elasticity of supply to be
A. positive.
B. negative.
C. zero.
D. None of the above
12. The income elasticity of demand estimates the impact of a change in
income on the demand for a good. For normal goods, the income elasticity
of demand is
A. positive.
B. negative.
C. zero.
D. None of the above
13. A soybean producer decides to store his soybeans in the local elevator
for 4 months. The price at harvest is $9.40 per bushel and the elevator
charges 2 cents per bushel per month for storage plus a 5-cent per bushel
handling charge. He has 5,000 bushels to sell and must borrow $47,000 at
7% 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. $9.53
B. $9.69
C. $9.75
D. $9.83
E. None of the above
14. 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
15. 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
16. 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
17. 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
18. Farmer Brown has a debt-to-asset ratio of 53%.
must be
A. negative.
B. 47%.
C. Less than 110%.
D. Greater than 115%.
E. None of the above
His debt-to-equity ratio
19. How many pounds of 48% protein soybean meal must be mixed with 9% protein
corn to make a ton of 18% protein feed?
A. 386 pounds
B. 390 pounds
C. 439 pounds
D. 462 pounds
E. None of the above
20. Which
A.
B.
C.
D.
E.
of the following is a market function?
storing
transporting
grading
processing
All of the above
21. Farmer Johnson has a rate of return on assets of 4% 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 higher return to farm assets.
E. None of the above
22. A farm business has a debt/worth ratio of 1:2. Its current liabilities
total $30,000 and its non-current liabilities total $120,000. What is
the value of its assets?
A. $450,000
B. $360,000
C. $240,000
D. $120,000
E. None of the above
23. A cattle feeding operation has sales of $730,000, feed purchases of
$300,000, other costs of $400,000, an opening inventory of $380,000, and
a closing inventory of $360,000. 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
24. If corn silage as fed contains 70% moisture and 2.2% protein, the dry
matter would be what percent protein?
A. 2.80
B. 3.08
C. 6.57
D. 7.33
E. None of the above
25. On March 1, 2009, Kate borrowed $25,000 to plant corn. On November 1,
2009, she repaid the $25,000 along with $1,100.00 interest. What annual
interest rate did she pay?
A. 5.5%
B. 6.6%
C. 7.7%
D. 8.8%
E. None of the above
26. 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
27. 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
28. 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
29. At the beginning of last year, a farmer had an outstanding loan for
$125,000. The interest rate was 7% 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. $113,250
C. $115,750
D. $120,500
E. None of the above
30. A feedlot operator purchases a pen of 60 feeder steers with an average
weight of 753 pounds and sells them at an average weight of 1142 pounds.
Total feed cost for the pen is $16,634. Feed cost per pound of gain is
equal to
A. $0.515
B. $0.649
C. $0.713
D. $0.733
E. None of the above
31. A producer sells 12 feeder steers for $104/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. $9,027.60
B. $9,054.00
C. $9,403.20
D. $9,958.80
E. None of the above
32. You can claim a tax deduction for a charitable contribution of $________
or more only if you have a written acknowledgment from the charitable
organization.
A. $100
B. $250
C. $1,000
D. $5,000
E. None of the above
33. The 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.
34. How many gallons of water must be mixed with a quart of herbicide to make
a 2% solution?
A. 12.25
B. 12.50
C. 24.75
D. 98.00
E. None of the above
35. 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
36. A hectare equals
A. 0.40 acres
B. 1.74 acres
C. 2.47 acres
D. 5.05 acres
E. None of the above
37. The CME live cattle futures contract is for ______ pounds of fed cattle.
A. 10,000
B. 40,000
C. 50,000
D. 100,000
E. None of the above
38. 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
39. On a dry matter basis, corn is roughly 69% starch and 8.7% crude protein.
dry mill ethanol plant converts all the starch in corn to ethanol while
leaving the protein unchanged in the byproduct, dried distillers grain.
Mathematically, what percent crude protein would you expect in this
byproduct?
A. 8.7%
B. 17.4%
C. 20.6%
D. 28.1%
E. None of the above
40. If dried distillers grain has 10% moisture and sells for $130 per ton,
what would be the nutrient equivalent price for wet distillers grain
which has 65% moisture?
A. $42.00 per ton
B. $50.56 per ton
C. $93.89 per ton
D. $108.89 per ton
E. None of the above
2010 DISTRICT 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. Answers have been rounded.
PROBLEM I - Market Value Balance Sheet
Using the information below, complete the net worth statement for
January 1, 2010:
Land . . . . . . . . . . . . . . . . . . . . . . $450,000
House . . . . . . . . . . . . . . . . . . . . . .
60,000
Machinery and equipment . . . . . . . . . . . . .
122,000
Cows . . . . . . . . . . . . . . . . . . . . . .
45,000
Calves . . . . . . . . . . . . . . . . . . . . .
17,000
Accounts payable . . . . . . . . . . . . . . . .
7,017
Autos . . . . . . . . . . . . . . . . . . . . . .
41,000
Sows and boars. . . . . . . . . . . . . . . . . .
35,000
Market hogs
. . . . . . . . . . . . . . . . . .
120,000
Checking and savings. . . . . . . . . . . . . . .
12,500
Soybeans. . . . . . . . . . . . . . . . . . . . .
14,000
Hog buildings . . . . . . . . . . . . . . . . . .
23,000
Feed and hay. . . . . . . . . . . . . . . . . . .
13,000
Operating loan balance . . . . . . . . . . . . .
89,000
Accounts receivable . . . . . . . . . . . . . . .
1,250
Accrued interest owed . . . . . . . . . . . . . .
22,692
Accrued taxes owed. . . . . . . . . . . . . . . .
7,900
30-year land loan balance is $320,000.
$12,000 plus interest is due March 1 of each year.
5-year tractor loan balance is $26,000.
$6,500 plus interest is due November 30 of each year.
30-year home loan balance is $51,000.
$600 plus interest is due each month.
Current Assets:
Current Liabilities:
________________________________
__________________________________
________________________________
__________________________________
________________________________
__________________________________
________________________________
__________________________________
________________________________
__________________________________
________________________________
__________________________________
________________________________
__________________________________
________________________________
__________________________________
________________________________
__________________________________
Total _________________
Total __________________
Non-current Assets:
Non-current Liabilities:
________________________________
__________________________________
________________________________
__________________________________
________________________________
__________________________________
________________________________
__________________________________
________________________________
__________________________________
________________________________
__________________________________
________________________________
__________________________________
________________________________
__________________________________
Total ______________
Total __________________
Total Assets
_________________
Net Worth
Total Liabilities ________________
_________________
Questions 1 through 7 refer to PROBLEM I
1.
The total value of current assets on January 1, 2010, was
A.
$176,500
B.
$177,750
C.
$180,250
D.
$212,750
E.
None of the above
2.
The total value of non-current assets was
A.
$776,000
B.
$782,500
C.
$789,700
D.
$801,700
E.
None of the above
3.
The total value of current liabilities was
A.
$126,609
B.
$133,109
C.
$145,709
D.
$152,309
E.
None of the above
4. The total value of non-current liabilities was
A.
$371,300
B.
$390,500
C.
$396,400
D.
$397,000
E.
None of the above
5. The net worth was
A.
$404,700
B.
$430,141
C.
$523,609
D.
$953,750
E.
None of the above
6. The net working capital was
A.
$25,441
B.
$54,309
C.
$177,750
D.
$430,141
E.
None of the above
7. What would the value of farm production need to be in order to
have a capital turnover ratio of 0.30?
A. $129,042
B. $187,690
C. $238,413
D. $286,125
E. None of the above
PROBLEM II -- Enterprise Budget
Use the dairy cow budget below to answer Questions 8 through 16.
_________________________________________________________________
DAIRY COW REPLACEMENTS IN 100 COW HERD
20,000 pounds of milk sold per year per cow unit
39% replacement rate
Operating Inputs
Units
Price
Quantity
Value
Promotion assess
Cwt
0.35
200.00
70.00
Milk hauling
Cwt
0.57
200.00
114.00
Dairy ration, 16%
Cwt
8.70
98.67
858.43
Hay
Tons
95.00
5.59
531.05
Salt & minerals
Lbs
0.15
130.00
19.50
Milk replacer
Lbs
0.75
5.00
3.75
Calf starter
Lbs
0.11
50.00
5.50
Pasture
AUMS
16.00
3.48
55.68
Breeding fees
Dol
25.00
1.00
25.00
Vet medicine
Dol
52.00
1.00
52.00
Supplies
Dol
39.00
1.00
39.00
Accounting
Hd
18.00
1.00
18.00
Utilities
Dol
47.00
1.00
47.00
Machinery labor
Hr
6.00
10.69
64.14
Equipment labor
Hr
6.00
6.27
37.62
Livestock labor
Hr
6.00
43.40
260.40
Mach fuel, lube, repair
102.91
Equip fuel, lube, repair
27.74
Total Operating Costs
2331.72
____________________________________
Fixed Costs
Amount
Value
Machinery
Interest @ 10%
371.17
37.12
Depr, taxes, insurance
54.98
Equipment
Interest @ 10%
452.75
45.27
Depr, taxes, insurance
70.22
Livestock
Dairy cow, 20,000
1475.00
Dairy heifer, 20,000
520.00
Dairy repl. heifer 20,000
273.00
Interest @ 10%
2268.00
226.80
Total Fixed Costs
434.39
______________________________________
Production
Units
Price
Quantity
Value
Milk
Cwt
12.90
200.00
2580.00
Dairy cows
Cwt
43.00
4.44
190.92
Dairy bull calf
Hd
105.00
0.48
50.40
Dairy heifers
Cwt
60.00
0.04
2.40
Total Receipts
2823.72
_______________________________________
Returns above total operating costs
492.00
Returns above all specified costs
57.61
_________________________________________________________________
8.
Total operating cost per cow is:
A.
$492.00
B.
$588.65
C.
$2,331.72
D.
$2,823.72
E.
None of the above
9. The return above total operating cost per cow is:
A.
$66.70
B.
$492.00
C.
$501.52
D.
$521.95
E.
None of the above
10.
How many
A.
B.
C.
D.
E.
hours of labor are budgeted per cow?
10.69
43.40
60.36
260.40
None of the above
11.
If each cow is milked for 305 days, how many pounds of milk are
given per cow per day on average?
A.
8.46
B.
12.90
C.
65.57
D.
200.00
E.
None of the above
12.
What is the total budgeted interest cost per cow?
A.
$82.29
B.
$226.80
C.
$309.19
D.
$434.39
E.
None of the above
13.
What price per pound is paid for hay?
A.
2.66 cents
B.
4.75 cents
C.
5.59 cents
D.
26.51 cents
E.
None of the above
14.
What interest rate is used in this budget?
A.
6.7%
B.
7.5%
C.
8.0%
D.
10%
E.
None of the above
15.
If all feed costs are increased by 20%, what will be the total
returns per cow above all costs?
A.
-$294.78
B.
-$237.17
C.
-$175.46
D.
+$197.22
E.
None of the above
16.
If all feed costs are increased by 20%, what milk price will cause
the returns above all costs to equal zero?
A.
$13.89/cwt.
B.
$14.02/cwt.
C.
$14.09/cwt.
D.
$14.37/cwt.
E.
None of the above
PROBLEM IV -- Supply and Demand
The 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
A.
B.
C.
D.
E.
the market equilibrium price of wheat in the U.S.?
P1
P2
P3
P4
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
A.
B.
C.
D.
E.
foreign demand, the equilibrium price of wheat would be
P1
P2
P3
P4
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 November 10, a farmer has 5,000 bushels of corn in his bin. He sells it
on February 15. Ignore commissions, storage cost, and interest.
November 10 quotes:
March futures price = $3.70
Expected basis = $0.10 under the board
Strike
price
$3.20
$3.30
$3.40
$3.50
$3.60
$3.70
--- Premiums --Call
Put
$0.73
$0.01
$0.63
$0.02
$0.53
$0.03
$0.43
$0.08
$0.33
$0.15
$0.24
$0.24
February 15 quotes:
March futures price = $3.75
Basis = $0.05 under the board
--- Premiums --Call
Put
$0.58
$0.01
$0.48
$0.02
$0.38
$0.04
$0.28
$0.11
$0.19
$0.19
$0.12
$0.29
29.
What is
A.
B.
C.
D.
E.
the cash price of corn on February 15?
$3.65
$3.70
$3.75
$3.80
None of the above
30.
If the farmer sold a futures contract on November 10 and bought back
the contract on February 15, what would be the realized price per
bushel (cash + net on futures) for the corn?
A.
$3.65
B.
$3.70
C.
$3.75
D.
$3.80
E.
None of the above
31.
If the farmer bought a $3.50 Put on November 10 and sold the Put on
February 15, what would be the realized price per bushel (cash + net
on options) for his corn?
A.
$3.62
B.
$3.67
C.
$3.68
D.
$3.73
E.
None of the above
32.
If the farmer bought a $3.50 Put and sold a $3.50 Call on November
10,and sold the Put and bought back the Call on February 15, what
would be the realized price per bushel (cash + net on options) for his
corn?
A.
$3.52
B.
$3.78
C.
$3.83
D.
$3.88
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 $3.50 Put option.
C.
Buying a $3.50 Put and selling a $3.50 Call.
D.
Selling the corn on November 10.
E.
Taking no market action.
PROBLEM VI - Time Value of Money
Use the following information to answer Questions 34-40.
N
Present
Value of
a $1
Future
Value of
a $1
Present
Value of
Annuity
1
2
3
4
5
6
0.9434
0.8900
0.8396
0.7921
0.7473
0.7050
1.0600
1.1236
1.1910
1.2625
1.3382
1.4185
0.9434
1.8334
2.6730
3.4651
4.2124
4.9174
34.
What is
A.
B.
C.
D.
E.
the present value of a dollar to be received in 4 years?
74.73 cents
79.21 cents
$1.26
$3.47
None of the above
35.
A field of alfalfa will produce $1,000 during the first year, $2,800
during each of the next 4 years and $2,000 in the sixth year. To the
nearest dollar, what is the present value of this income stream?
A.
$10,431
B.
$11,507
C.
$12,301
D.
$13,104
E.
None of the above
36.
A beef cow produces after-tax returns at the end of the year of
$70/year for 5 years and can be sold for $400 after-tax at the end of
the fifth year. Assume the above table uses the appropriate discount
rate and determine the current value of the cow to the nearest
dollar.
A.
$285
B.
$478
C.
$496
D.
$594
E.
None of the above
37.
With one year of income remaining in the beef cow in Question 36, how
much should she be worth, to the nearest dollar, using the above
tables?
A.
$406
B.
$443
C.
$455
D.
$470
E.
None of the above
38.
If the farmer expects interest rates to increase, but no change in
net returns to cattle, what impact is this likely to have on the
present value of the beef cow?
A.
Decrease the present value
B.
Increase the present value
C.
Would not change the present value
D.
Cannot tell
39.
40.
What is the annual payment on a $20,000 loan amortized over 4 years?
A.
$4,747.89
B.
$5,244.94
C.
$5,771.84
D.
$5,904.58
E.
None of the above
What discount rate is used in the table for this problem?
A.
5.0%
B.
6.0%
C.
6.5%
D.
7.0%
E.
None of the above