The full cost price: fixed, variable, depreciation, labour, with your own figures
Level 10 taught you to calculate what a kilo of chicken or an egg cost, item by item, at the end of a flock. The farm manager needs more: to know what share of that cost is there even when the houses are empty, what share grows with every chick, how much the wear of the houses weighs in silence, and from how many flocks in the year the farm really starts to earn. That is the full cost price, the one that lets you set a floor price, judge a contract, decide to open or close a house. Always in units and percentages: the amounts are yours.
14 min read · 5-question quiz at the end
By Abdul Hussein ChoumanFounder of NEXTEKCI · Agnibilékrou hatchery since 2006This lesson is part of Farm manager: finance, growth, succession specialisation. It opens to every registered student, from free registration. Levels 1 to 5 and the tracks remain readable by everyone.
Level 10 taught you to calculate what a kilo of chicken or an egg cost, item by item, at the end of a flock. The farm manager needs more: to know what share of that cost is there even when the houses are empty, what share grows with every chick, how much the wear of the houses weighs in silence, and from how many flocks in the year the farm really starts to earn. That is the full cost price, the one that lets you set a floor price, judge a contract, decide to open or close a house. Always in units and percentages: the amounts are yours.
- ✓Separate variable costs from fixed costs and explain why the difference changes every decision of the farm manager
- ✓Calculate the depreciation of a house and of equipment, and spread it per flock and per kilo
- ✓Calculate the full cost price per live kilo and per egg, and the break-even point in flocks and as a percentage of turnover
- ✓Quantify the effect of a failed flock and of a drop in laying rate on the cost of the kilo and of the egg
- From the cost price of the flock to the full cost price
- Variable and fixed: the same farm, sorted differently
- Depreciation: the wear you pay without seeing it
- The break-even point: from which flock do we earn?
- Per kilo and per egg: the effect of a failed flock and of a falling laying rate
- Going further
- •Full cost per kilo = all the costs of the year ÷ all the kilos sold: 90 units ÷ 40,608 kg, that is 90 hundredths of the average selling price; 10 remain.
- •Variable costs 81 units (feed 62, chicks 13, health 2, litter-energy 2, transport 2), fixed costs 9 (labour 5, depreciation 3, interest 1); contribution margin: 1.06 unit per flock.
- •Depreciation = value ÷ useful life: three houses of 10 units over 15 years = 2; equipment 5 units over 5 years = 1; total 3 units to put aside every year.
- •Break-even point = fixed costs ÷ margin per flock = 8.5 flocks, or 9 ÷ 0.19 = 47% of turnover; with a manager (+3): 11.3 flocks; price −8%: 14.8 flocks.
- •Failed flock (mortality 10%, 1.9 kg, FCR 2.15): cost per kilo +14%, that is 102.6 hundredths, a loss of 2.6% per kilo; laying rate from 82 to 76%: cost per egg +7.9%.