AGEC 325 Exam 2 Questions and
Answers Graded A+
What is an enterprise budget? - Correct answer-An enterprise budget provides an
estimate of the potential revenue, expenses, and profit for a single enterprise. Each
crop or type of livestock that can be grown is an enterprise.
What is the purpose of an enterprise budget? - Correct answer-The primary
purpose of an enterprise budget is to estimate the projected costs, returns, and
profit per unit for the enterprises. They are often called the building blocks of a
whole-farm plan and budget.
What are the parts and structure to an enterprise budget? - Correct answer-1. The
name of the enterprise being budgeted and the budgeting unit are shown first.
2. Income or revenue from the enterprise is shown next.
3. Quantity, unit, and price are included.
4. The cost section is next and is in two parts: variable (or operating) costs and
fixed (or ownership) costs.
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, 5. The gross margin above variable costs is an intermediate calculation showing the
remaining revenue to be applied to fixed costs.
6. Estimated profit per unit is the final value.
What is the formula for computing the break-even yield? - Correct answer-BEY =
(total cost) / (output price)
What is the formula for computing the break-even price? - Correct answer-BEP =
(total cost) / (expected yield)
How do you use budgets to estimate profit? - Correct answer-The estimated profit
is found by subtracting total expenses from gross revenue.
How do you use budgets to estimate returns to--- and returns over---? - Correct
answer-If the revenue generated through an enterprise budget is sufficient to cover
all the costs, including the opportunity costs, of producing the crop then the return
to management is positive. (Vise versa)
What is a partial budget? - Correct answer-A partial budget is often the appropriate
way to analyze changes involving interactions between several enterprises.
What does a partial budget provide? - Correct answer-A partial budget provides a
formal and consistent method for calculating the expected change in profit from a
proposed change in the farm business. It's a form of marginal analysis.
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Answers Graded A+
What is an enterprise budget? - Correct answer-An enterprise budget provides an
estimate of the potential revenue, expenses, and profit for a single enterprise. Each
crop or type of livestock that can be grown is an enterprise.
What is the purpose of an enterprise budget? - Correct answer-The primary
purpose of an enterprise budget is to estimate the projected costs, returns, and
profit per unit for the enterprises. They are often called the building blocks of a
whole-farm plan and budget.
What are the parts and structure to an enterprise budget? - Correct answer-1. The
name of the enterprise being budgeted and the budgeting unit are shown first.
2. Income or revenue from the enterprise is shown next.
3. Quantity, unit, and price are included.
4. The cost section is next and is in two parts: variable (or operating) costs and
fixed (or ownership) costs.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
, 5. The gross margin above variable costs is an intermediate calculation showing the
remaining revenue to be applied to fixed costs.
6. Estimated profit per unit is the final value.
What is the formula for computing the break-even yield? - Correct answer-BEY =
(total cost) / (output price)
What is the formula for computing the break-even price? - Correct answer-BEP =
(total cost) / (expected yield)
How do you use budgets to estimate profit? - Correct answer-The estimated profit
is found by subtracting total expenses from gross revenue.
How do you use budgets to estimate returns to--- and returns over---? - Correct
answer-If the revenue generated through an enterprise budget is sufficient to cover
all the costs, including the opportunity costs, of producing the crop then the return
to management is positive. (Vise versa)
What is a partial budget? - Correct answer-A partial budget is often the appropriate
way to analyze changes involving interactions between several enterprises.
What does a partial budget provide? - Correct answer-A partial budget provides a
formal and consistent method for calculating the expected change in profit from a
proposed change in the farm business. It's a form of marginal analysis.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
