Question

pretend you are a cattle rancher and you are going to develop a budget for your yearling enterprise. in the fall you wean 100 hd. of steers off your cows. you feed them through the winter, turn them out on leased pasture in the spring and then sell the steers on aug. 30th.- the yearlings will be fed winter feed from november 1st - april 1st. feed costs $2.20/hd./day.- they will be turned out on the leased grass from april 1st - august 30th. the grass costs $1.00/hd./day- mineral is fed when the cattle are turned out on the grass. the mineral cost is $0.15/hd./day- youre hired man spends 2 hrs. per day on the yearlings. you pay him $20/hr.- you expect to doctor 5 hd. per month and it costs $20.00/hd. each time they are doctored- you estimate that it will cost $10/me. for the electricity to run the water wells- you will spend a grand total of $500 in fuel- tags are $0.35/hd.- the sale barn charges $8.00 per hd. in sales commissions.- you sell 98 hd. at the end of the summer. the cattle weigh 800 lbs. and you project a sale price of $1.42/lb.- the trucking bill to get the cattle to and from the grass and to the sale barn is expected to be $750.yearling enterprise budget| variable costs | item cost || ---- | ---- || medicine | $ || winter feed | $ || grass lease | $ || tags | $ || fuel | $ || utilities | $ || labor | $ || mineral | $ || sale commission | $ || total fixed costs: | $ |

Explanation:

Step1: Calculate Medicine Cost

First, find total months: Nov-Aug is 10 months. Total head doctored: $5 \text{ hd/month} \times 10 \text{ months} = 50 \text{ hd}$. Cost: $50 \times \$20.00 = \$1000$

Step2: Calculate Winter Feed Cost

Nov 1 - April 1 is 152 days (Nov:30, Dec:31, Jan:31, Feb:28, Mar:31, Apr1 excluded). Cost: $100 \text{ hd} \times \$2.20/\text{hd/day} \times 152 \text{ days} = \$33,440$

Step3: Calculate Grass Lease Cost

April 1 - Aug 30 is 151 days (Apr:30, May:31, Jun:30, Jul:31, Aug:30). Cost: $100 \text{ hd} \times \$1.00/\text{hd/day} \times 151 \text{ days} = \$15,100$

Step4: Calculate Tags Cost

Cost: $100 \text{ hd} \times \$0.35/\text{hd} = \$35$

Step5: Fuel Cost

Given total fuel cost: $\$500$

Step6: Calculate Utilities Cost

Nov-Aug is 10 months. Cost: $\$10/\text{mo} \times 10 \text{ mo} = \$100$

Step7: Calculate Labor Cost

Total days: $152 + 151 = 303$ days. Total hours: $2 \text{ hrs/day} \times 303 \text{ days} = 606 \text{ hrs}$. Cost: $606 \text{ hrs} \times \$20/\text{hr} = \$12,120$

Step8: Calculate Mineral Cost

Mineral fed only on grass (151 days). Cost: $100 \text{ hd} \times \$0.15/\text{hd/day} \times 151 \text{ days} = \$2,265$

Step9: Calculate Sale Commission

Cost: $98 \text{ hd} \times \$8.00/\text{hd} = \$784$

Step10: Calculate Total Variable Costs

Sum all variable costs: $\$1000 + \$33,440 + \$15,100 + \$35 + \$500 + \$100 + \$12,120 + \$2,265 + \$784$

Step11: Calculate Fixed Cost (Trucking)

Given trucking cost (fixed): $\$750$

Answer:

Variable Costs	Item Cost
Winter Feed	\$33,440
Grass Lease	\$15,100
Tags	\$35
Fuel	\$500
Utilities	\$100
Labor	\$12,120
Mineral	\$2,265
Sale Commission	\$784
Total Variable Costs	\$65,344
Total Fixed Costs:	\$750

Additionally, total revenue from sale: $98 \text{ hd} \times 800 \text{ lbs/hd} \times \$1.42/\text{lb} = \$111,232$
Net Profit: $\$111,232 - \$65,344 - \$750 = \$45,138$