1) 100 market steers average 1,325 lb each. At $95/cwt, what is the total value of these steers on the hoof?
2) A farmer is custom finishing a group of beef cattle on grass supplemented with a pelleted diet to improve gain and meat quality. His current pellets cost $290/ton and he has the opportunity to purchase another pellet that costs $275/ton. Research done by Virginia Cooperative Extension indicates that F/G on the first pellet is 5.4 whereas F/G on the second pellet is 5.7. Which pellet would be more cost effective?
3) Your horse boarding operation is having trouble earning profits. You have space for 12 horses, but you typically only have 8 stalls occupied. You charge $350/month to board each horse. Your variable expenses (feed, labor, bedding, supplies, etc.) are $3,240/month for 8 horses. Your fixed expenses (depreciation, interest, property taxes, etc.) are $2,500 per month. Variable expenses are incurred because you have horses; fixed expenses are ones that occur even if you have no horses.
a) What is your gross monthly income (before any expenses are taken out) with 8 stalls occupied?
b) Boarding 8 horses per month, how much would you need to charge per horse each month to break even (costs = income)?
c) If you could get your occupancy rate up to 11 horses, what is your break even number? Remember that fixed expenses stay the same but variable expenses go up with more horses.
d) What are two other ways you might be able to change the situation so your business is more profitable?