Goats

In: Business and Management

Submitted By gow1023
Words 441
Pages 2
If Jaden McCoy accepts the proposal, there will be incremental revenues and expenses associates with it. The main revenue will be rental fee of goats. 25 goats will be available per day and the rental fee is $15 per day. Total size of the area is 43,650 square feet and a goat would eat about 250 square feet or forage daily. 25 goats will eat 6250 square feet per day so it will take 7 days to clear the site. Revenue calculated by the number of calendar day times rental fee times 25 goats is $2625 (See Appendix A: Incremental revenues).
There are four categories in expenses: set-up costs, fencing costs, shepherd and dog costs, and transportation costs. Set-up cost is approximately $100. The length for linear foot of fence is 962 feet and cost is $0.75 per feet. So the total fencing cost is $721.50. $190 is required for a shepherd and dog for 7 days; this would cost $1330. It is 80 miles per day to drive and 7 days are required to finish the work. Transportation costs will be $352.80 with rate per mile of $0.63. It was assumed that transporting set-up material to and from the site and removing fences to a local recycle center can be done while moving the goats, so there is no additional expenses required. Adding all expenses together, total expenses are $2504.30 (See Appendix B: Incremental expenses).
Total 7 days are required for the project and variable costs are $1682.80 per 7 days including shepherd and dog and transportation costs. Set-up and fencing costs are fixed costs and the total fixed cost is $821.50. Revenue of $375 per day less variable cost per day $240.40 equals $134.60, which is contribution margin per day for the current proposal (See Appendix C: Income statement). Using the equation of 375 x = 821.5 + 240.4 x, there are no gains until day 6 for the current proposal. However, on the seventh day there is a breakeven with revenue becoming positive…...

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