May, 1932] Economic Study of Poultry Farms 41 



dividual poultryman should make adjustments in the formula to more 

 nearly fit his special case. Some operators would have larger and oth- 

 ers smaller inputs per dozen eggs. 



However, if this formula is to be used for outlook work, it is well to 

 note that some of the costs enumerated above may not materially 

 ■change whether the operator keeps hens or not. The 13.7^- for overhead 

 is based on interest on estimated investment, depreciation, insurance, 

 etc., and these items would continue even if the hens were all sold. 



Use of Formula in Outlook Work 



To illustrate how the cost formula may be used, we may assume 

 approximate prices in the spring of 1932: 



30^ grain "1 C 8^ broilers 



18^ labor I J 14^ fowl 



4^ supplies 

 13.7^ overhead 



y 



5^ chicks 



1 dozen eggs 



or 

 1 dozen eggs = 65.7 - 27 = 38.7^ 



It would appear under the assumption of the formula that the poul- 

 tryman must average 38.7^ for his eggs if he is to receive wages of 30^ 

 an hour for his time, 5% return on estimated investment and an allow- 

 ance for depreciation. However, if he decided from a review of the 

 outlook that the price of eggs for the year would average lower than 

 38.7^, he might still decide to keep on because some return on capital 

 invested and some return on labor are better than no return. If eggs 

 averaged only 25^ per dozen, he would be able to get some return above 

 the cost of feed and supplies. It will be noted that a five-cent decrease 

 in value of broilers and fowl per pound raises the estimated cost of pro- 

 ducing eggs by approximately five cents per doz. Such a formula may 

 have some value in showing the relationship between cost factors, cred- 

 its for by-products, and cost of eggs and enable the individual to have 

 a better measure of his position relative to other years. 



Since these costs are based on assumptions of rate of wages, return 

 ■on estimated investment, etc., and since the value of these is somewhat 

 dependent upon the value of eggs, the definite figure on cost of produc- 

 ing eggs has little value in itself and should be used only for relative 

 -comparison with other years or as a means of roughly comparing effi- 

 ciency on individual farms. 



^Relative Comparison of Cost of Producing 1 Eggs 



Although eggs are a joint product with fowl and broilers, in order to 

 -study some of the management problems in more detail, the cost of pro- 

 ducing eggs was estimated for each of the 23 farms. For this purpose 

 many of the cost items had to be allocated arbitrarily and the inven- 

 tory of pullets at the beginning of the year was given a definite value. 

 Since the same methods of allocation and same assumptions were made 

 in the case of each farm, the results should roughly indicate the com- 

 parative costs. The costs are based on the following assumptions : — 



1. Value of pullets at housing time was assumed at $2.00 — 



