V. Conclusions and Applications of Results 



Combined Costs of Assembly and Processing 



The long-run average cost of broiler processing falls from 3.803 

 cents per pound at an output of 4.15 million pounds per year to 2.642 

 cents per pound at an output of 69.16 million pounds per year.^ The 

 cost of broiler assembly on the other hand increases at the 5.000 pound 

 per square mile per year density level from 0.637 cents per pound for 

 the 4.15 million pound per year firm to 0.919 cents per pound for the 

 69.16 million pound per year firm. 



By combining these costs of processing and assendily, information 

 is obtained which is more complete and useful than either taken sep- 

 arately. Table 7 and Figure 11 illustrate this for the three density levels. 

 At the very low broiler production density level of 1,000 pounds per 

 square mile per year assembly costs rise rapidly and eventvially out- 

 weigh the fall in the processing plant economies of scale. With this 

 density level the comliined assembly and processing costs reach a min- 

 imum at 4.098 cents per pound for Firm C with an annual volume of 

 24.9 million pounds. 



In a broiler supply area with a 5.000 pound density level the min- 

 imum combined long-run average cost of processing and assendDly occurs 

 at a larger firm size than for the lower density level considered. Inspec- 

 tion of Table 7 and Figure 11 indicates that minimum combined costs 

 will occur slightly beyond the 70 million pound per year firm size. 



Table 7. Long-run Average Costs of Broiler Processing and Assembly 

 for Six Firm Sizes at Three Density Levels. 



The most dense production situation, 25,000 pounds per square mile 

 per year, has a combined assemlily and processing cost of 3.296 cents at 

 the extreme end of the curve in this analysis — 69 million pounds per 

 year. The analysis shows that the combined long-run average cost curve 

 is still falling. 



^ Rogers and Bardwell, op. cit., p. 16. 



33 



