The Whole Farm Budget

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The Whole Farm Budget

• Final Table(s) in the Farm Plan

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Steps

• Develop Enterprise Budgets
• Develop the Whole Farm Plan (LP)
• Use LP results, Enterprise Budgets, and estimates
  of next year's fixed costs to make the whole farm
  budget.

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Table 6 contains information on cash fixed
costs. In the absence of better information, use
last years fixed costs to project next years
fixed cost. Also, you can assume
your depreciation for the next year is the
same as last years.
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Find the Variable Costs for WFB
Use your enterprise levels from the whole farm
plan, plus the variable costs from the enterprise
budgets. Example
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Our old LP with a limit on soybeans of 350
acres. Produce 350 acres soybeans, 150 acres
peanuts, 100 cows.
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Make the Variable Cost Table

• Make a row with the enterprises to be produced,
  plus total and modified
• Get LP answers and fill in the next row with
  correct enterprise levels
• Make a column of all types of variable costs you
  see in the enterprise budgets
• Fill in values for each crop, by copying the
  numbers from the right enterprise budget

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LP answers
types of variable expenses from enterprise budgets
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copy in these values from the enterprise budgets
Check Totals!!!
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Check your work
To make sure you have copied all values
correctly, sum the values in each column and
check against the totals from the Enterprise
Budgets
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example values copied into table 15a from the
soybeans budget
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Next, find the total cost for each variable input
by multiplying the level of each enterprise
produced by the cost of the variable input and
adding them up. For example Seed Cost
33350 69150 0100 21,900
soybeans peanuts cattle
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Last Step in Table 15a
As a last step, modify the costs to reflect the
cost structure on your farm, using the ratio
you calculated in table 9. For our example, that
ratio is 0.83.
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Values multiplied by ratio from table 9
projected total variable cost
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Making the WFB
Calculate expected revenue from enterprise
budgets. Subtract the expected variable costs
you calculated in table 15a. Then subtract the
fixed costs (from farm records.)
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from 15a
pull from your income statement
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Final Step
Calculate the Improvement If Net Income on
Income Statement is Positive Net Returns from
WFB -- Old Net Income Old Net
Income Multiply by 100 to get percentage
improvement
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Final Step
Calculate the Improvement If Net Income on
Income Statement is Negative Calculate the
absolute improvement. By how many dollars did
projected income for next year increase compared
to last year?