10 Chapter 10 Enterprise Budgeting

Cost of production per unit is computed from the equation

• total fixed cost divided by output

• total variable cost divided by output

• total cost divided by quantity of output produced

• total cost divided by output selling price

If output increases with no change in total cost, breakeven selling price will

• increase

• decrease

• remain constant

• initially decrease and then begin to increase

The unit for a crop enterprise budget is usually

• a section of land (640 acres)

• 100 pounds of output (cwt.)

• one bushel of output

• one acre or hectare

Which of the following are or could be totally noncash expenses on an enterprise budget?

• depreciation

• labor expense

• management expense

• all of the above

Which of the following terms, if used on an enterprise budget, would be considered the same

as variable cost?

• ownership cost

• operating cost

• overhead cost

• indirect cost

Which of the following would be a fixed cost on a typical crop enterprise budget?

• owned land charge

• machinery repairs

• hourly labor expense

• seed cost

On a breeding livestock enterprise budget, if replacement females are assumed to be raised on

the farm or ranch,

• an expense item for their depreciation should be shown

• the number of young females sold should be reduced

• the cost of buying replacements should also be included

• income from the sale of cull breeding animals can be ignored

On an enterprise budget, fixed costs are also called

• direct costs

• operating costs

• prepaid costs

• ownership costs

Interest is included as a variable cost on an enterprise budget

• only if money will be borrowed

• capital will be tied up in variable costs until revenue is received

• because of the investment in machinery

• because of the investment in land

Cost of production will be the same value as

• average total cost

• total cost

• average variable cost

• marginal cost