Question
Zoe Garcia, a family farmer, wishes to expand into fresh organic milk business by purchasing 4 cows. She can purchase a head of milk cow
Zoe Garcia, a family farmer, wishes to expand into fresh organic milk business by purchasing 4 cows. She can purchase a head of milk cow at a price of $2080 per cow. The yield per cow averages 7.2 gallons each day. She estimates feed to cost $4.19 per day per cow. She further estimates 3.1 hours of labor per day taking care of the operations for all the cows. Assume a labor rate of $9.80 per hour. Zoe estimated other overhead costs to run $45.60 per day. Assume that Zoe can sell milk at a price of $11.20 per gallon.
A).What is the contribution margin to the fixed cost generated per day?(round answer to 2 decimal places)
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