Milko owns dairy cattle. The market value of the cattle is calculated by reference to the litres of milk able to be produced and the lactation rate of the cows. The cattle are regularly sold at auction. Costs incurred to transport the cattle to auction are $500 per truck. Each truck can transport approximately 100 cattle.
Number of mature cows held at 30 June 2013 5000
Average litres of production per cow 6000 litres
Lactation rate 50%
Price per litre 40 cents
The market value for each cow at 30 June 2013 is:

Question

Quizplus · Accepted Answer

To calculate the market value of a cow, we need to first calculate the total amount of milk produced by each cow in one year (6000 litres x 50% lactation rate = 3000 litres). 
Then, we need to multiply the total amount of milk by the price per litre to get the value of the milk produced by one cow in one year (3000 litres x $0.40 = $1200). 
Therefore, the market value for each cow is $1200.

Milko Owns Dairy Cattle