QUESTIONS ON THE TEXT 257 



In fact the New York stockyards form a fair index to the status 

 of the dairy industry in the States surrounding that city. Here 

 the number of milk cows destined for slaughter fluctuates as the 

 balance between feed-costs and milk-price fluctuates. 



Why Study Cost of Production? Knowledge of cost of produc- 

 tion in agriculture is important both from the individual and the 

 social viewpoint. Society at large is becoming more and more 

 interested in price fixing by commissions, by governmental regu- 

 lations, or by collective bargaining, as outlined in the preceding 

 chapter. And cost of production is one of the important factors 

 in this problem of price fixing. From the standpoint of the indi- 

 vidual farmer cost of production studies should show what par- 

 ticular farms or what enterprises on any farm are being operated 

 at a loss. The following questions could be answered: ' 



How many marginal producers are there? 



How many producers are lower than marginal producers, and 

 what amount do they produce? 



How many producers are higher than marginal producers and 

 what amount do they produce? 



The submarginal farmer, like the submarginal manufacturer, 

 knowing his cost of production, could lower the unit cost of his 

 product, improve his marketing methods, or promptly shift to 

 some other enterprise. As agriculture is now organized, many 

 submarginal farmers actually continue year after year to farm at a 

 loss, before definite and conscious insolvency drives them from the 

 unprosperous acres. Perhaps in no other business does anyone 

 or can anyone continue so long to labor at a net loss. 

 QUESTIONS ON THE TEXT 



1. Compare manufacturing and agriculture as to the use made of cost 



accounting. 



2. Show that the farmer is an entrepreneur. 



3. What principle does the Babcock test illustrate? 



4. Show what is being done to-day in studying cost accounting in agriculture. 



5. What cost units were used in the Minnesota studies? Define each. 



6. Show the factors in cost of production in addition to labor costs. 



7. Which factors are most important? 



8. Is "cheap labor" desirable? 



9. Give some cost figures for Iowa corn, barley, oats, wheat. 



10. Give some Wisconsin cost figures for oats, barley, rye, wheat. How do 



they compare with the Iowa figures? 



11. Explain the Minnesota method of accounting for annual depreciation of 



farm machinery and annual value consumed. 



12. Compare cost of producing Minnesota field crops with same crops in Iowa 



and Wisconsin. 



13. Should loss of soil fertility be included in costs of production? Reasons 



for your answer. 



14. What are the signs of progress in cost accounting in agriculture? 



17 



