It is recommended that you refer to your records to derive your costs. The Crop Insurance premiums shown are a representative average of producer premiums for the 2000 crop. Experience is the best guide in budgeting machinery costs. Prior year's statements of income and expense can provide information on equipment repairs, maintenance, and fuel costs. The portion of those costs that relate to crop production can be divided by the acres of crop produced to arrive at a cost per acre.
Overhead expenses are a major part of the total cost of doing business.
In addition to depreciation of machinery, the depreciation charge should include all related tools and storage buildings. Return on investment is an opportunity cost to you - the rate of return that you expect or want on your invested capital. An alternative method would relate more closely to cash flow requirements if there are debt commitments for land and equipment. In this case, use interest and principal payment commitments rather than depreciation and expected return on invested capital. Other overhead expenses should include insurance and storage.