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Old Mule Farms Case Solution

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Submitted By apruitt01
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To: | Michael Giberson, BECO 4310-006 | From: | Arielle Pruitt | Date: | January 27, 2014 | Re: | Old Mule Farms Case | | | | |
Jim and Donna Green live on a farm that has been in their family for three generations. However, they have been losing money over the past couple of years because of what it costs to maintain their cows they use for breeding. To help offset their losses, Donna focused on making sure the calf weight at weaning was larger than in past. She also included nutrients in their feed and selected sires whose calves generally grew at a faster rate. These measures helped to increase the farms efficiency but unfortunately it was still not enough. One night after watching The Cattle Show on television, Donna and Jim had several questions on how they should proceed to raise their revenue for the upcoming year. Their first was question is what is the appropriate size for each cow in the herd. The second question the couple has is which method was most appropriate at measuring size: weaning a calf that weighs half of its mother, or comparing the cost of selling the calf to the cost of maintaining the cow. Their third and final concern is to figure out what the drivers of the cow-calf operation are and if the revenue-expense calculation is clear in regards to drivers.
To answer Donna’s first question, I would recommend the average cow size in the herd be 1,100 pounds. The method that most appropriately measures this factor is comparing the cost of selling the calf to the cost of maintaining the cow. As for the last question the couple has, I believe the main driver in this situation is the weight of each cow, and the revenue-expense calculation is proof of this.
Each cow in the herd should weigh 1,100 pounds. It seems that no matter the weight of the cows, the Greens will still be losing profit, but they will lose the least amount if weight…...

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