The performance, fuel and horsepower requirements of selected farm equipment are shown in Table 3. 60 3.0 4.0 12.0 Round Baler 1500 Lbs. This table does not account for the variation in rates of work or horsepower requirements caused by differences in soil type, topography, field shape, drainage or equipment operators. Labour costs are a consideration in any budget, but the value used will depend on the situation. Add labour costs where you feel it is justified.
Machinery is expensive and ties up large amounts of capital.
If a machine is to be used cost-effectively, it must see enough hours of use annually to have ownership and operating costs below the cost of the same operation being done custom. Consider the combine shown in Table 4 at three different levels of annual use. Highly profitable operations would be able to justify covering fewer acres because of the tax savings from the capital cost allowance on the combine. Farms harvesting less than 1000 acres would be better off purchasing a used combine or a less expensive new machine. Annual Cash Costs Based on Repayment Cash costs estimate the impact of the purchase and its use on annual cash flow.