Dollars and cents of Poultry Production

Dollars and Cents

Poultry Production

Why is It Important?

What Should be Included?

• Income– Eggs

• Different sizes

– Meat• Retired egg layers• Meat birds

• Expenses– Production– Processing/Marketing

What Expenses Should be Included?

Processing/Marketing

Classification of Costs• Variable

– Costs vary according to production units– What would be some variable expenses?

• Fixed– Costs don’t change and are same no matter

production units– What would be some fixed expenses?

Preparing for Budget

• Assumptions– Do some research

• Assumptions Needed for Egg Production?• Assumptions for Meat Birds?• Records help

– Production – Financial

Meet Joe and Sue

Example Egg Budget - IncomeEgg Production BudgetFrom PSU Farming Alternatives

Receipts Quantity Unit Price TotalJumbo or extra Large0 dozLarge 1,000 dozMedium 0 dozReceipts from Eggs1,000 doz 1.00$ 1,000$ Fowl Sold 0 lbs 0.05$ -$

1,000$

Example Budget – ExpenseChicks 105 bird 2.82$ 296$ Feed 63 cwt 29.00$ 1,827$ Advertising 30$ Electricity 100$ Supplies 202$ Repairs and maintenance 175$ Egg cartoning and packing 450$ Other

Total Variable Costs 3,080$ Returns over Variable Costs29,357$ Production and Marketing Expenses

Depreciation Calculation Original Sal. Useful Ann.

Equipment Cost ValueLife (Yrs.) Dep.

$500 $50 10 $45$2,500 $100 10 $240

$1 $1 1 $0$1 $1 1 $0$1 $1 1 $0

$285

Buildings$2,000 $250 15 $116.67

$500 $25 15 $31.67$1 $1 1 $0.00$1 $1 1 $0.00$1 $1 1 $0.00

$148.33

BrooderEgg Cooler

Equipment

Hen houseProcessing

Building

LaborFixed Costs Rate/Labor 134 hrs. 10 $1,340.00Insurance and taxes $155Real Estate $75Equipment Depreciation $285Building Depreciation $148Return to Labor and Mgmt. $1,000

$3,003$6,083

$167

Breakeven cost per dozen $6.08

(From (From

Total Fixed CostsTotal Costs

Net Income

A year later……….

Meat Bird Enterprise BudgetMeat Bird BudgetFrom PSU Farming Alternatives

Receipts Quantity Unit Price TotalDressed weight of birds 4.75 lbsBirds processed per batch 75 birdsNumber of batches per year 5Anticipated price per lb. lbs 6.00$ -$

Projected Income 10,688$

Meat Bird Variable ExpenseVariable CostsChicks 400 bird 2.82$ 1,128$ _________Feed 1,800 lbs. 0.18$ 324$ _________Marketing 450$ _________Processing Cost 0 bird 3.50$ -$ _________Electricity 200$ _________Supplies 550$ _________Repairs and maintenance 175$ _________Other

Total Variable Costs 2,827$ _________Returns over Variable Costs6,525$ _________

Depreciation Calculation Original Sal. Use.Equipment Cost Value Life Dep.

$500 $50 10 $45.00$700 $50 15 $43.33$500 $250 15 $16.67$500 $50 10 $45.00

$1 $1 1 $0.00$1 $1 1 $0.00

$150.00

Buildings$1,000 $250 10 $75.00$2,000 $100 15 $126.67

1 $0.00$201.67Building

Processing

Equipment

Hen House

Washing Freezer

BrooderPlucker

Meat Bird Fixed Costs

Labor hrInsurance and taxes $155Real Estate $75Equipment Depreciation $150Building Depreciation $203Return to Labor and Mgmt. $5,000

$5,583$8,918

$1,770

Breakeven cost per lb. $5.01

Total Costs

Net Income

(From

Total Fixed Costs

(From

The Reward

• What can I expect to earn?• What is it going to cost me to produce and sell?

Assignment

• Complete either budget • Due next week