Black River Farms

Name: Black River Farms (English version)
SKU: 9B17B021

David M. Currie; Kyle S. Meyer

Product #:9B17B021

Supplier:Ivey

Discipline:Accounting, Entrepreneurship

Setting:United States, 2016

Details:Case (PDF) • 7 pages • 2017-09-13

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In 2016, the owner of a cow-calf operation must decide what the appropriate weight for cows in their herd is. For decades, the national trend has been for cow weights to increase because they produce larger calves, but evidence indicates that cow weights may have reached the point where the cost of maintaining a larger cow has become greater than the return from producing a larger calf. Analyzing this issue introduces marginal principles from economics. Formerly Old Mule Farms, product no. 9B10B004.

Learning Objectives

This case is appropriate for a microeconomics or managerial economics course at the undergraduate or graduate levels as a real-world example of marginal analysis. The case can be extended to a discussion of managerial accounting principles such as drivers, cost allocation, and CVP analysis. Students compute contribution margin per cow and then compute the herd size needed to break even or achieve a target profit. The challenge then becomes choosing the most effective way to replenish the herd while minimizing financial risks and short-term losses. After completing the case, students will have an understanding of these concepts:

Marginal analysis
Determining cost drivers
Cost allocation
CVP analysis

Black River Farms

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Learning Objectives