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.
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Input Feed Kg/hd
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Output weaner kg/hd
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Cost $/hd
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Revenue $/hd
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Net income $/hd
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Marginal input cost (MIC)
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Value of marginal product (VMP)
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360
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140
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370
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152
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380
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160
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390
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165
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400
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168
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410
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170
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420
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171
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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.
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Losses
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Gains
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Extra costs
Total A..................
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Costs save
Total B..................
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Revenue forgone
Total C..........................
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Additional revenue
Total D............................
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Net gain
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Part B.
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Calculate the break-even weight for weaners. Show your calculations here.
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