Nature's Grain Corporation Nature's Grain Corporation Grows Grain in Rural Areas of the Areas

Essay

Nature's Grain Corporation
Nature's Grain Corporation grows grain in rural areas of the South. The corporation's costs per bushel of grain (based on an average yield of 130 bushels per acre) follow:
Nature's Grain Corporation defines direct material costs as seed, fertilizer, water, and other chemicals. The variable overhead costs represent maintenance and repair costs of machinery. The fixed overhead costs are completely comprised of depreciation expense on machinery and real estate taxes.
Refer to Nature's Grain Corporation. Assume that the current date is March 15. On this date, the corporation must make a decision as to whether it is financially better off to plant a certain farm with grain or leave the land idle (no income is derived from idle land). Grain prices have been severely depressed in recent years and Nature's Grain's best guess is that grain prices will be around $2.00 per bushel at the time the crop is ready for harvest. Should the company plant grain or leave the land idle? Explain.