Question

Suppose you are a manager of a dairy farm. You are currently milking 100 cows and each cow produces 22,000 pounds (220 cwt, where cwt means "hundred pounds") of milk per year. To produce this quantity of milk, the farm milks the each cow twice a day (once in the morning and once in the afternoon). Now suppose milk prices are increasing. Over the past few months the price of milk has increased and milk is now selling for $15/cwt. The increase in milk price has got you thinking – should I increase my milking times from twice a day to three times a day (adding another milking time in the evening). If you do increase milking times to three times a day, your VT dairy extension specialist estimates your milk production per cow will increase to 26,000 pounds of milk per year (260 cwt per cow per year). Of course you will need more labor to get this extra milk. Each milking requires 2 people to work 5 hours each. You must pay each worker $10.00/hr during the week and time and a half during the weekends ($15.00/hour). You will need to feed your cows some extra feed since they will be producing more milk. The extension specialist estimates you will need to feed each cow an additional 4 pounds of soybean corn meal mix per cow per day in the milking parlor. Soybean/corn feed sells for $250/ton at the local coop. Operating the milking equipment and parlor an additional 5 hours/day will also cost you an additional $1,000 in electricity per year. Finally, since your cows will be working harder and will be stressed more, you also expect you vet bills go up about $5,000 per year.

How much additional milk production can the farm expect to achieve over the entire year from the third milking?

4000 cwt

26000 cwt

22000 cwt

Question 21

Suppose you are a manager of a dairy farm. You are currently milking 100 cows and each cow produces 22,000 pounds (220 cwt) of milk per year. To produce this quantity of milk, the farm milks the each cow twice a day (once in the morning and once in the afternoon). Now suppose milk prices are increasing. Over the past few months the price of milk has increased and milk is now selling for $15/cwt. The increase in milk price has got you thinking – should I increase my milking times from twice a day to three times a day (adding another milking time in the evening). If you do increase milking times to three times a day, your VT dairy extension specialist estimates your milk production per cow will increase to 26,000 pounds of milk per year (260 cwt per cow per year). Of course you will need more labor to get this extra milk. Each milking requires 2 people to work 5 hours each. You must pay each worker $10.00/hr during the week and time and a half during the weekends ($15.00/hour). You will need to feed your cows some extra feed since they will be producing more milk. The extension specialist estimates you will need to feed each cow an additional 4 pounds of soybean corn meal mix per cow per day in the milking parlor. Soybean/corn feed sells for $250/ton at the local coop. Operating the milking equipment and parlor an additional 5 hours/day will also cost you an additional $1,000 in electricity per year. Finally, since your cows will be working harder and will be stressed more, you also expect you vet bills go up about $5,000 per year.

What will be the increase in labor costs over the year?

$41,600

$13,000

$15,600

$124,800

Question 22

Suppose you are a manager of a dairy farm. You are currently milking 100 cows and each cow produces 22,000 pounds (220 cwt) of milk per year. To produce this quantity of milk, the farm milks the each cow twice a day (once in the morning and once in the afternoon). Now suppose milk prices are increasing. Over the past few months the price of milk has increased and milk is now selling for $15/cwt. The increase in milk price has got you thinking – should I increase my milking times from twice a day to three times a day (adding another milking time in the evening). If you do increase milking times to three times a day, your VT dairy extension specialist estimates your milk production per cow will increase to 26,000 pounds of milk per year (260 cwt per cow per year). Of course you will need more labor to get this extra milk. Each milking requires 2 people to work 5 hours each. You must pay each worker $10.00/hr during the week and time and a half during the weekends ($15.00/hour). You will need to feed your cows some extra feed since they will be producing more milk. The extension specialist estimates you will need to feed each cow an additional 4 pounds of soybean corn meal mix per cow per day in the milking parlor. Soybean/corn feed sells for $250/ton at the local coop. Operating the milking equipment and parlor an additional 5 hours/day will also cost you an additional $1,000 in electricity per year. Finally, since your cows will be working harder and will be stressed more, you also expect you vet bills go up about $5,000 per year.

How much will the farm's variable costs (labor, feed, vet costs, electricity) increase by?

$193,600

$44,450

$123,500

$65,850

Answer 1

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