CHAPTER II 



THE COST OF FEED 



The largest and most important item of cost is the feed. 

 This varies greatly with different cows and with different 

 methods of feeding. The kinds of feed used, the amounts 

 consumed, and the cost have a marked influence on the total 

 cost of producing milk . 



One of the first questions met with is whether feed should be 

 charged at cost of production or at market price, the market 

 price, of course, being considered as the price at which it could 

 be purchased. There is considerable difference of opinion as 

 to which cost should be used. Hawkins ^ in discussing this 

 from the factory standpoint sums up his conclusions as follows: 



The advocates of cost price claim that by means of it they 

 show the actual cost of manufacture and not what might have 

 been the cost, and that it does not interfere with the balancing of 

 the stores accounts in money value. Those who uphold market 

 price claim that it furnishes a sounder basis for estimating and for 

 competitive purposes by dealing with actual value rather than with 

 former value, and that it rightly causes the effect of fluctuations to 

 be seen in the stores accounts rather than in the job accounts, so 

 that profits or losses due to chance or speculation are distinguished, 

 , as they should be, from ordinary trading results." 



In the production of milk it is a question whether the cost 

 of producing the feeds on the farm or the price they could 

 be sold for on the market should form the basis of cost cal- 

 culation. Unless the latter is used as the basis, the dairy cost 

 accounts may be lost in the profits or losses in the farm oper- 

 ations. If the cost of production price is assumed a difference 

 in cost of milk production may be more influenced by the cost 

 of production of the feeds than any other factor, and besides 



1 " Cost Accounts," L. W. Hawkins, p. 78. 



