Question

Grosbeck Cattle Company has gathered the following information about operations for the past year.

Year 1 Year 2 Year 3

	Year 1
Cow herd size	120
Revenues from sale of calves	$108,000
Feed	18,200
Labor (1 cowboy per 120 cows)	24,000
Cow depreciation	15,300
Bull depreciation (1 bull per 30 cows)	1,698
Medications/vaccinations	3,120
Land lease	11,000
Operating income	30,633

(a) Determine the "per unit" cost table on the preprinted worksheet.

(b) How much is the per-cow contribution margin?

(d) Assuming Mathew's land will support a herd of 360 cows, project anticipated profits. Why is the

profit more than twice as much as the amount that is earned on a herd size of 120 cows?

Please make the answers clear, thank you!

Answer 1