Reference no: EM13153455

Produce a Gross Margin budget using the following information.

The farm has 105 cows in a steady state herd; however, a number of heifers are purchased from outside the farm each year to add to genetic diversity. The farm sells 33 heifers each year for $250 per head. The farm owns five bulls.

Each year 10 heifers are bought for $280 per head. One bull is purchased for $1500 to replace the one old one that was sold for $800. Seventeen cull cows are sold for $320 per head and 43 steers are sold for $270 per head. Animal treatments occur in May and September at the rate of $2.50 per treatment per cow and $3.20 per bull. The cost of treating the 90 calves is half of the amount for cows. Other variable costs are $12 per cow.

Supplementary feed is valued at $160 per tonne for 25 tonnes each year. Marketing and transport costs $5 per head and this is only charged on animals sold from the farm. Industry levies are $4 per head per year for each animal sold.

Rates and insurance cost $1,200 per year. The interest cost is 7 per cent per annum. Management labour is $4,000 per year and casual labour for this activity is $1,500. Depreciation on pumps and irrigation equipment is $115 per year. The vet fees are $600 on average each year.

Income
Expenses
Gross Margin
Gross Margin per head