You are a Dairy farmer in Ford Beauford employing 12 workers and have completed the herd composition for the next budget year. You must complete the income and cost budget for the Dairy enterprise for the budget period from 1//11//2017 to 31//10//2018. It is assumed that 100 cows will be milked during the year giving an average dally yield of 15 litres per cow. The milk will be sold fresh to a dairy for R 6.50 per litre. {:[” Hides sold (from dead and slaughtered animals) “,R 80.00//” hide “],[” Marketing costs for animals sold: “,6%” of sales value “],[” Feed concentrates “,R 3825.00//” cow milked “],[” Doses “,R 382.50//” calf born “],[” Vaccine: “quad33” heifers 1-2 “,R 366.65//” heifer

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## Expert Answer

This solution was written by a subject matter expert. It’s designed to help students like you learn core concepts.

To complete the income and cost budget for your dairy enterprise for the budget period from 1/11/2017 to 31/10/2018, follow these steps:

i. Complete the livestock income and cost budget:

Milk Income:

Number of cows milked = 100

Average daily yield per cow = 15 liters

Total annual milk production = 100 cows 15 liters/cow 365 days = 547,500 liters

Milk price per liter = R6.50

Milk income = 547,500 liters * R6.50/liter = R3,566,250.00

Other Income:

Hides sold = R80.00 per hide

Marketing costs for animals sold = 6% of sales value

Calculate income from hides and marketing:

Income from hides = 0 (assuming no hides sold)

Marketing costs = 6% of total sales value of animals sold

Total Income:

Total income = Milk income Income from hides Marketing costs

ii. Determine the Direct Gross Margin per LSU (Livestock Unit):

To determine the Direct Gross Margin per LSU, you need to know the Livestock Units (LSUs) on your farm. Each type of livestock has a specific LSU value. Calculate the total LSU value for your herd, and then divide the Direct Gross Margin by the total LSUs.

iii. Determine the improved pasture variable costs per LSU:

Given that the average variable costs for pastures are R3150.00 per hectare, you need to calculate the total variable costs for pastures and then divide it by the total LSUs.

iv. Determine the Livestock Gross Margin per LSU AND per R100 variable costs:

To calculate the Livestock Gross Margin per LSU, subtract the pasture variable costs from the Direct Gross Margin per LSU.

To calculate the Livestock Gross Margin per R100 variable costs, divide the Livestock Gross Margin by the total variable costs and then multiply by 100.

v. Neatness of your work:

Ensure that your budget calculations are clear, organized, and easy to understand. Use proper formatting and labels for each calculation.

Please provide the number of LSUs and any additional information about your herd composition and animal sales to complete steps ii, iii, and iv.

NOTE

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