Goats: The Green Alternative (A) - Case Study Example

In addition, he will not pay anything for the food of for his goats, aside from other arising expenses to undertake the procedures. On one hand, this is a win-win situation for the McCoy and company goats business because he gets paid for his goats to graze freely on some land and forage owned by the resort. This proposal presents an opportunity to Mr. McCoy to increase his revenue collection from his goat business. As such, when he accepts the proposal from the resort supervisor to use his goats in clearing and maintaining the acres of land within hilly and rocky grounds owned by the resort, he would get some good income. Mr. McCoy estimates this income to sum up to US $ 15 as the acceptable rental fee per goat on a daily basis.

This is an additional income considering that the goats will feed well at the rocky and hilly terrain owned by the resort, and thus return home full of milk for the day. In fact, it would be a double per day for Mr. McCoy and his acceptance of the proposal spells future business deals whereby other firms would approach him to rent his goats in order to maintain their fields. This would in return expand McCoy’s span of income from the goat business in addition to the revenue he gets from the milk produced by the goats on a daily basis However, acceptance of the proposal comes along with a number of additional expenses to the goat business conducted by Mr. McCoy. These include the set up costs, the transportation costs, the costs incurred for the dogs, and the fencing costs.

Set up costs arise due the logistics and planning activities that he has to carry out before undertaking the business efficiency. These include planning logistics on how to ferry the goats on a daily basis from his farm to the location of the resort. Fencing costs are those that arise from fencing the different portions of land on which he wants to put his goats into business. Fencing cost arises from the portion of land that he aims to maintain within a given period with his goats, before moving another section or division. Mr. McCoy would also have to incur extra cost for shepherding the goats while at the site of the resort.

This means he would have to hire extra workers to accompany his goats to graze at the resort, and this deep more into his pockets to cover these costs. Apart from the shepherds, he would also have to pay the dogs, which the shepherds use while herding the goats. Transportation cost will also arise as he would have to transport his goats to the site every morning for herding, and return them to his farm in the evening for rest. This would create some extra costs since initially he used to drive his goats into a nearby piece of land for them to graze feely without paying a dime for getting them to the fields.

As such, the above five are the incremental cost that Mr. McCoy will incur when he accepts the offer. A cost driver is a unit of cost, which leads to formation of a cost. For example, in the case of McCoy, a cost driver arises from the new expenses he has to incur because of his new business proposal. This means that every new cost that he has to incur and meet through his business revenues is a cost center. In addition, these cost centers bring about specific expenses to the business, such as the incremental cost hat he would incur after accepting the proposal.

These include transport costs