THE COST OF FEED 7 



it is the profit of the dairy that is directly the result and 

 purpose of these accounts. Also, if based on cost of produc- 

 tion there is no profit for the work one puts in the production 

 of these feeds. If the production cost of feeds is high on a 

 particular farm it is reflected in the dairy accounts, and if by 

 efficient management of the farm the feeds are produced cheaply, 

 then the dairy receives undue credit. Pouli ^ in his studies of 

 milk cost in Switzerland says: 



"By the introduction of the market price we want to exclude the 

 effect of variation of production cost ... so as to arrive at con- 

 clusions applicable to the general and average cost on the individ- 

 ual farm, we have then seemingly objective, but in reality also 

 varjdng estimates of prices, which can lead to the above variation 

 of prices. If we add to this the deviation of other expenses, then 

 we get varying conclusions of average cost, although the price rate 

 will correspond to the local or temporary circumstances, in the 

 estimates of the cost of mUk production." 



When the dairy is considered separately from the farm, 

 there is no doubt that it should be charged with feeds at 

 market prices, but when the dairy farm is small or where the 

 dairy is distinctively a necessary part of the whole farm scheme, 

 then perhaps the cost price could be used. In an interview 

 with Mr. Nicholson, an authority on cost accounting," he 

 stated that it was his practice in large plants that have sev- 

 eral departments to charge material from one to another at 

 market price, but with small plants actual cost of materials 

 is used. 



In figuring feed costs there are several important points to 

 keep in mind; the following will be discussed: 



1. The proportion of roughages or coarse feeds. 



2. The amounts of roughage. 



3. A balanced ration. 



4. Amount of pasture. 



5. Feed for maintenance. 



6. The quantity and quality of milk produced. 



' Produktionskostenberechungen, Archiv fur Exakte Wertschaftsforschung, 

 Erg. 7. 



^ " Cost Accounting, Theory and Practice," J. L. Nicholson. 



