FBM Chapter 4 - Budget Analysis

A plan that outlines the expected income and expenses for a specific production process, such as growing a crop or raising livestock.

A method for organizing resources, allocating resources in advance, and assessing the potential profitability of various plans.

A "what if" analysis using budgeting tools to examine potential outcomes before making a final decision about resource allocation.

A formal budget helps farmers and ranchers stay updated on economic or production changes that could affect the profitability of their operations.

The process of using budgeting to identify potential cost and income items that may be overlooked.

The time and effort required to gather data, analyze information, and create a budget, which may limit its usefulness.

Challenges in accurately predicting prices and yields in the future, which can impact budget reliability.

The risk of unexpected production challenges or financial setbacks impacting budget accuracy.

The cost of a specific operation per unit of measure.

The amount of resource used in a particular operation.

The total cost of an operation.

The cost of labor, fuel, repairs, and other expenses directly related to an operation.

The cost of buying or leasing equipment, such as tractors and harvesters.

The difference between the gross income from selling soybeans and the cost of producing them, excluding fixed costs like land ownership.

Total costs associated with running a soybean farm, including both variable (operating) costs like labor and fertilizer, and fixed costs like land ownership and depreciation.

The price of soybeans per bushel. In this example, the price is projected to be $9.25.

The estimated number of bushels of soybeans expected to be harvested per acre. In this example, the projected yield is 40 bushels.

Expenses related to growing soybeans, excluding fixed costs like land ownership. These include costs like labor, fertilizer, and pesticides.

The revenue generated from selling soybean crops.

A financial tool that helps farmers estimate the income and expenses associated with growing soybeans. It breaks down costs and potential returns.

The act of applying herbicides to control weeds in soybean fields.

The price at which revenue from selling a crop would equal the operating expenses, resulting in no profit.

Costs that are incurred regularly to operate a business, such as fuel, repairs, and labor.

Costs that are relatively fixed, such as land, machinery, and building costs.

The cost of operating machinery per hour, which includes fuel, maintenance, and depreciation.

The cost of operating machinery per acre, which includes fuel, maintenance, and depreciation.

A measure of how much a crop is expected to yield per unit of land, typically measured in bushels per acre.

The selling price per unit of a crop, typically measured in dollars per bushel.

A financial statement that projects the costs and returns associated with a particular farming operation.

A budgeting method where each input cost is directly related to the amount yielded, meaning more yield means higher costs.

The point where revenue from selling a crop equals the total cost of producing it. This indicates neither profit nor loss.

The price per unit of a product (like corn) that needs to be achieved to cover all production costs and reach the break-even point.

The expected quantity of a product (like bushels of corn) that will be harvested from a specific area, typically per acre.

Costs incurred before the harvest of a crop, such as the cost of fertilizer and herbicide.

The cost of producing a product, typically calculated per unit (such as per bushel or per carton).

The amount of a product (like broccoli) harvested from a specific area, typically expressed as a number of units, like cartons or bushels.

A budgeting tool used to evaluate the profitability of changes in farm operations, comparing costs and returns associated with the alteration.

A scenario in which a farmer chooses to graze cattle rather than sell them early to a feedlot, aiming for potential higher returns from weight gain through grazing.

A budgeting technique that identifies and analyzes all costs and returns that change due to modifications in a farm's production processes.

A critical reminder that the results of a partial budget are only as reliable as the data used to create it.

A key consideration for farmers when using partial budgeting, as unexpected factors can significantly affect the accuracy of the analysis.

A practice where farmers and ranchers utilize partial budgets to make informed decisions based on a thorough evaluation of potential costs and returns.

A crucial aspect of partial budgeting, emphasizing the need for careful consideration of every potential cost and income item in the analysis.