Shelling Earth (SE) will hedge on its anticipated December purchase of 6,000,000 bushels of soybeans. The current spot price for soybeans is 884, contract size is 5,000 bushels and the initial margin is $4,725 per contract (maintenance margin in $3,500). The current January soybean futures price is 895. Suppose that in December when SE closes its futures position the basis is the same as it is currently.

a. The December spot price is 870. What is the January futures price in December? 881

b. Suppose instead that the spot price in December is 878 and that the basis in December is zero. What will be SEs profit (loss) on its futures position? What is SEs effective cost of soybeans? $1,020,000 loss; $8.95

Answers given, just looking for some explanations/work for them please!