Question

INTRODUCTION Jaden McCoy operated a dairy goat farm in Soddy-Daisy, Tennessee, and was considering expanding the rental of his goats for land clearing. In early 2011, McCoy successfully bid on a job to clear a section of property at a nearby resort. McCoy's goats performed as expected and he eamed a small profit in the process. The resort manager was quite happy because the difficult-to-reach areas of the property were cleared on time and on budget at a cost well below what he would have paid for a crew of humans. As a result, the owner asked McCoy if he would be interested in renting his goats to clear other sections of the resoit property. McCoy went back to his farm and summarized the revenues and expenses for the resort job, which generated a modest profit of US$120.70 for the seven days the goats were on the job (Exhibit 1). While the profits from this job were not very large, McCoy was intrigued by the opportunity to develop this line of business to complement his profits from goat dairy farming. Soddy-Daisy was located in the foothills of the Smoky Mountains, so the terrain in the vicinity was frequently better suited to goats than to humans. McCoy knew goats had proven effective in controlling the spread of kudzu, a fast-growing vine prevalent in Souther states. Several local governments had considered goats as a cost-effective, environmentally sensitive way to maintain large areas of difficult to reach properties within their jurisdictions. McCoy believed renting goats to local governments to control noxious weeds, such as kudzi, provided a vitually untapped market for his goat rental business. For example, the City of Chattanooga, Tennessee had successfully used goats to control kudzu in the past and had included US$20,000 in its 2010-2011 fiscal year budget to hire goats for kudzu control."

Answer 1

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Note: I have answered part 1 of the question 1 as the solution is too lenghty and HOMEWORKLIB RULES restricts it to a constrained leve. Be sure to ask the rest of the questions in a seperate part, I will be more than happy and willing to help !!!

There are certain assumptions we must make before proceeding to the case:

• The pace of deterioration and the hour of procurement isn't given in the inquiry. In this way, we accept that the expense of bigger trucks and trailers has just been borne by the organization and no installments will be made towards them for example no costs will be brought about in getting them.
• The expense for the present trucks and trailers is additionally not given, so we expect that no installments as well as expenses are to be incorporated while making counts.

According to question, we have to ascertain the quantity of schedule days expected to finish the activity utilizing current trucks/trailers and the bigger trucks/trailers. At the end of the day, we have to ascertain the Break Even Days when the in any event the absolute expense caused in the activity will be recuperated.

In this way, we liken the income and the complete expenses in the two situations..

Case 1: Current Trucks/ Trailers

Let the number of calendar days required be x.

So, Total Revenue = 375x

Total Fixed Cost = Fencing Cost + Set up Cost = 0.75*962 + 100

Total Variable Cost/ Day = Shepherd and Dogs Cost + Truck Maintenance & Operations Costs

= >190 + 0.63*80 (Data taken from Exhibit 2) = 240.40

For breakeven, Revenue = Costs

=> 375x = 240.4x + 821.5....................(1)

On solving the above equation, we get, x = 6.103 days

which is not possible, so we round it off to 7 days

But, to calculate the max number of jobs that can be taken with this combination of Trucks/ Trailers, we use x = 6.103.

Number of Jobs/ year = 365/ 6.103 = 59.8. We round it off to 59 as it cannot be 60

Case 2: Larger Trucks/ Trailers

Considering Exhibit 4,

Equating revenue = costs,

375y = (1.25*80 + 190)y + 100 + 0.75*962 ( y is the days)

On solving the above equation, we get, y = 9.66 days, Rounding it off to 10

Number of Jobs/ year = 365/ 9.66 37.78 or 37 jobs/ year.