Develop a partial budget for a change in cattle production

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Reference no: EM13153474

Question 1.

Complete the table below for a feed price of $380 per tonne and a weaner price of $1.10 per kilogram. Indicate the optimal range of feed use. State how you would choose the optimal range.

Input Feed Kg/hd

Output weaner  kg/hd

Cost $/hd

Revenue $/hd

Net income $/hd

Marginal input cost (MIC)

Value of marginal product (VMP)

360

140

 

 

 

 

 

370

152

 

 

 

 

 

380

160

 

 

 

 

 

390

165

 

 

 

 

 

400

168

 

 

 

 

 

410

170

 

 

 

 

 

420

171

 

 

 

 

 

Question 2.

Develop a partial budget for a change in weaner cattle production.

This question has two parts (Parts A and B).

Proposed change: Replace a 90 cow herd producing 39 steers and 40 heifers to be sold at 18 months with a 85 cow herd producing 74 weaners for sale at 9 months. Assume that one bull will be sold.

Information

Steer price $380 per head

Heifer price $410 per head

Weaner price $2.70 per kilogram

Average weaner weight 200 kilograms

Bull $3750 per head

Cows $520 per head

Health

Weaners $15 per head

Heifers $18 per head

Steers  $17 per head

Feed costs

Cows $80 per head per year

Heifers $65 per head per year

Steers $62 per head per year

Bulls $110 per head per year

Weaners $45 per head per year

Labour $60 per head (all age groups)

Interest rate 8 % per annum

Part A.

Complete the partial budget for the change in enterprise and show the profit/loss expected as a result of the change. Use the gains and losses table provided.

Losses

Gains

Extra costs

 

 

 

 

 

 

 

Total A..................

Costs save

 

 

 

 

 

 

 

Total B..................

Revenue forgone

 

 

 

 

 

 

 

Total C..........................

Additional revenue

 

 

 

 

 

 

 

Total D............................

Net gain

 

Part B.

Calculate the break-even weight for weaners. Show your calculations here.

Reference no: EM13153474

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