Question

Problem #1
Set up an Enterprise Budget for your farm using the following information. Use the format we talked about in class.
You've decided to plant corn on your 200 acres for the next year.
Based on historic trends, you are expecting your yield to be 19,000 bushels.
You've signed a forward contract with a local supplier to receive a price of $6.50 per bushel.
Currently, you've bought 6 million seeds at a price of $2.50 per thousand seeds, fertilizer (34,000 lbs of nitrogen at $0.60 per lb and 9,000 lbs of phosphorus at $0.45 per lb), 200 acres of pesticide for $6,400, and crop insurance for $5,800.
You expect that it will cost you $0.25 per bushel to dry and $0.45 per bushel to transport your fnal product.
On top of your opportunity cost of 1,200 hours of labor at $18 per hour, you expect to hire 300 hours of labor at $13 per hour.
Finally, you have the long-lived asset cost. You have already calculated $3,000 of machine depreciation, $800 for machinery insurance and taxes, $16,000 for mortgage payment, and $1,000 in various overhead expenses.
Format your table!

Answer 1

Please see the workings and the budget below

Description	Working	Receipt	Expenditure	Net Income
Sale of corn	$6.50*19,000	123500		123500
Seeds	$2.50*6000000/1000		15000	-15000
Fertilizer - Nitrogen	$0.60*34000		20400	-20400
Fertilizer - Phosphorus	$0.45*9000		4050	-4050
Pesticides	Given		6400	-6400
Insurance	Given		5800	-5800
Drying cost	$0.25*19,000		4750	-4750
Transport cost	$0.45*19,000		8550	-8550
Labor hiring	$13*300		3900	-3900
Machine depreciation	Given		3000	-3000
Machine insurance	Given		800	-800
Mortgage	Given		16000	-16000
Overhead	Given		1000	-1000
Net accounting profit				33850
Opportunity cost of own labor	$18*1,200		21600	-21600
Net economic profit				12250