Ch. 22 FBM

One advantage of custom hiring machinery operations over owning your own machine is:

• it is more convenient

• it requires less investment capital

• depreciation deductions help reduce taxes

• you have more control over the quality of work performed

Timeliness costs result from:

• late planting or harvesting of crops

• owning machinery for a longer than average number of years

• hiring hourly labor to operate machinery

• trying to repay machinery loans over a very short term

Farm machinery capital leases allow the farmer to:

• deduct depreciation expense for the machine for income tax purposes

• purchase the machine at the end of the lease for below market price

• reduce repair and maintenance costs, compared to owning the same machine

• have less capital tied up in intermediate assets

The main advantage of purchasing used machinery instead of new machinery is:

• lower initial investment

• increased reliability

• a longer expected useful life

• lower repair costs

Field efficiency would probably be highest for which operation:

• combining

• planting

• spraying

• plowing

The most common method of acquiring the use of farm machinery in the United States is:

• custom hiring

• owning

• renting

• leasing

Machinery ownership costs are often called fixed costs because they do not change when the annual use of the machine changes.

• True

• False

Calculating a capital recovery charge for a machinery investment replaces estimating depreciation and insurance costs.

• True

• False

Only actual field time should be considered when labor costs for machinery are calculated.

• True

• False

Diesel powered farm machinery generally uses more fuel per hour than gasoline powered machinery.

• True

• False