METHODS OF CONDUCTING COST STUDIES. 



13 



Table 1. — Beef-cattle loss and gain (actual farm figures). 



Number of steers 48 



Farm income $8, 398. 00 



Labor income $2, 996. 00 



Book loss (feed at farm price plus interest on cattle capital) $1, 103. 63 



Book loss per bead $23. 00 



Gain (feed at cost of production, no interest) $659. 62 



Gain per bead. $13. 76 



Table 1 illustrates the point from a beefrcattle enterprise. On 

 the farm in question, which yielded a farm income of over $8,000 and 

 labor income of approximately $3,000, the book record on 48 steers, 

 with feed at market prices and interest included as a cost, showed a 

 net loss of over $1,100, amounting to $23 per head. Viewedfrom this 

 angle only, a man having this experience might be considered quite 

 speculatively inclined if he were to continue to feed steers. 



Charging the feed to the steers at the operating cost of production, 

 however, with no interest on land charged as a cost, there is a gain for 

 the cattle enterprise of $659, amounting to $13.76 per head. This 

 approximates what the farmer actually received from feeding cattle. 

 In other words, while he did not receive fully quoted farm prices for 

 all the feeds consumed by the steers, he pocketed what might be 

 termed a fairly satisfactory return for his handling of the cattle if 

 there is no thought of what might have resulted if he had perchance 

 done otherwise. It would not be surprising if this farmer were to 

 continue his feeding operations. 



Carrying the comparison of opportunity and operating cost into the 

 feeding of hogs, Table 2 illustrates the returns from the feeding of 

 hogs for three years on a Minnesota farm. 



Table 2. — Hog profits on a Minnesota farm. 





1913 



1914 



1915 





Cost per 

 bushel. 



Farm 

 price per 

 bushel. 



Cost per 

 bushel. 



Farm 

 price per 

 bushel. 



Cost per 

 bushel. 



Farm 

 price per 

 bushel. 



Corn , . , 



SO. 39 

 .16 

 .29 



$0.48 

 .40 

 .56 



$0.32 

 .28 

 .28 



$0.53 

 .32 

 .54 



Soft 



$0.18 



.34 





Oats 



$0.42 



Barley 



.45 









10.62 



5.52 



10.24 



.84 



4.30 



2 20 







This table presents the comparison of the operating expense per 

 bushel of corn, oats, and barley produced on the farm and the average 

 farm price, which was used as the charge for the feed consumed by 

 the hogs under cost-accounting procedure. It will be noted that the 

 profit in 1913 in charging the feed at farm prices was fairly satis- 

 factory from a cost standpoint, amounting to $5.52 per head. Charg- 

 ing the feed at actual operating expense to the farmer showed a profit 



