Lauren has determined that the demand for guinea pig meat will soon equal 75 percent of the chicken market, plus guinea pigs are also a pet market. So she and Aaron are converting their broiler enterprise to “pig” production. They develop an annual enterprise budget and find that each female guinea pig can have 3 litters of 11 piglets each year. The operating costs for producing each litter is $23 and the fixed costs for each female is $42 per year. They can sell guinea piglets for $17 each as pets or sell the meat for $15 per piglet after incurring an additional $4.50 per litter for processing the meat. Do the following analysis for Noisy Wolf Farms: (show work as appropriate)
What is their cost of production (per year) for raising guinea pigs for pets?
What is their cost of production (per year) for raising guinea pigs for meat?
What is the break-even price for selling guinea pigs as pets?
What is the break-even price for selling guinea pigs as meat?
How many piglets would they need to yield per litter to break even selling pets?
How many piglets would they need to yield per litter to break even selling delicious meat?
If Aaron discovers a wealthy new market of guinea pig consumers and they can charge an additional 4.75 per pig’s meat, how many female guinea pigs do they need to make $125,000 profit in a year.
What does guinea pig taste like?