Partial budgeting Subject
A shift from handweeding to chemical application a. Rice variety - PSB Rc 82 b. Season planted - Dry c. Location - Experiment Station d. Chemical application: 7 liters/ha at P1,600 per liter e. Labor: Chemical application or spraying = one day at P350 per day Handweeding = 30 days at P350 per day f. Sprayer: Acquisition cost=P5,000 Estimated useful life - 5 years Salvage value = equivalent to 10% of acquisition cost Method of computing depreciation = straight-line method g. Interest rate = 12% per annum charged against sprayer and working capital h. Harvest Handweeding - 115 cavans Chemical application - 90 cavans Price per cavan-P800 Harvester-thresher's share = 1/5 of the gross harvest Assumptions: a. There is only one cropping season in a year (i.e., dry season only, no wet season) b. Fixed costs are incurred even if the input is not used, and hence should be charged for one whole year in this case. Examples of fixed costs in item (2) are the annual depreciation and interest charged on sprayer. (Another hint: Use 12% to compute for the interest charged on sprayer.) c. Variable costs change as total production changes, and hence should be charged for six (6) months only (i.e., dry season) in this case. Examples of variable costs are the costs of chemical and labor, harvester-thresher's share, and interest on working capital. (Another hint: Use 6% to compute for the interest on working capital.) Should the farmer shift from handweeding to chemical application? Explain. A shift from handweeding to chemical application a. Rice variety - PSB Rc 82 b. Season planted - Dry c. Location - Experiment Station d. Chemical application: 7 liters/ha at P1,600 per liter e. Labor: Chemical application or spraying = one day at P350 per day Handweeding = 30 days at P350 per day f. Sprayer: Acquisition cost=P5,000 Estimated useful life - 5 years Salvage value = equivalent to 10% of acquisition cost Method of computing depreciation = straight-line method g. Interest rate = 12% per annum charged against sprayer and working capital h. Harvest Handweeding - 115 cavans Chemical application - 90 cavans Price per cavan-P800 Harvester-thresher's share = 1/5 of the gross harvest Assumptions: a. There is only one cropping season in a year (i.e., dry season only, no wet season) b. Fixed costs are incurred even if the input is not used, and hence should be charged for one whole year in this case. Examples of fixed costs in item (2) are the annual depreciation and interest charged on sprayer. (Another hint: Use 12% to compute for the interest charged on sprayer.) c. Variable costs change as total production changes, and hence should be charged for six (6) months only (i.e., dry season) in this case. Examples of variable costs are the costs of chemical and labor, harvester-thresher's share, and interest on working capital. (Another hint: Use 6% to compute for the interest on working capital.) Should the farmer shift from handweeding to chemical application? Explain
