Old Mule Farms

The owner of a cow-calf operation must determine the appropriate weight for cows in the herd. The national trend for decades 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. The case can be extended to a discussion of drivers and allocation of expenses, which are managerial accounting principles. The case is appropriate for a managerial cost accounting course and for managerial or microeconomics courses. The case uses concepts such as direct costs, cost drivers, allocation and marginal analysis to examine the issue of appropriate cow weight.