Question

If the selling price was only $4.85 per bu., what per acre yield would be necessary to break-even?

given this information

1. Expected yield 35.0 bu.per acre2. Selling price $ 5.25 per bu.3. Labor cost -preharvest $ 9.80 per acre4. Land rent $47.50 per acre5. Fertilizer cost $26.50 per acre6. Seed cost $25.00 per acre7. Chemical cost $ 12.75 per acre
C. OTHER INFORMATION(CONT.)8. Tractor variable cost $13.20 per acre9. Variable cost on othermach. & equip. $ 5.65 per acre10. Custom harvesting, hauling, etc. $25.00 per acre11. Compute interest on totalpreharvestcosts @ 6% for 6 months

Answer 1

Fixed Costs
	Labor Cost	$	9.8	per acre
	Land Cost	$	47.5	per acre
	Fertilizer Cost	$	26.5	per acre
	Seed Cost	$	25	per acre
	Chemical Cost	$	12.75	per acre
Total Fixed Costs		$	121.55	per acre
Variable Costs
	Tractor Cost	$	13.2	per acre
	Other Mach. & Equip.	$	5.65	per acre
	Custom harvesting, hauling	$	25	per acre
Total Varaible Costs		$	43.85	per acre
Total Costs		$	165.4	per acre

For Break Even the Total Revenue = Total Cost

Break-Even Expected Yield per hectare = X bu per acre

Selling Price per acre = $4.85 per bu

Total Revenue = X * 4.85

For Break Even,

Tota Revenue = Total Cost

X*4.85 = 165.4

X = 34.32 bu per acre (Answer)

INTEREST CALCULATION

Total Cost = $ 165.4 per acre

Out of all the costs given only Custom harvesting, hauling costs ($25) are post-harvesting.

So, pre harvesting costs = $165.4 -$25 = $ $140.4 per acre

Interest @ 6% for 6 months

I = PTR/100,

Where I=Interest

P=Principal=$140.4

T=TIme in years=6 months = 6/12 year = 0.5 year

R= Rate of Interest = 6%

I = (140.4*0.5*6)/100 = $ 4.21 (Answer)