Pure Milk 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...

Pure Milk 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 $1500 per truck. Each truck can transport approximately 100 cattle.

Number of mature cows held at 30 June 20188000

Average litres of production per cow 5000 litres

Lactation rate 70%

Price per litre 30 cents

The market value for each cow at 30 June 2018 is:

$1000.

$1050

$1500.

$1680.