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, Nature's Grain Corporation must make a decision as to whether it is financially better off to plant a certain farm to grain, leave the land idle (no income is derived from idle land), or rent the land to another farmer for $50 per acre. Grain prices have been severely depressed in recent years and Nature's Grain Corporation's best guess is that grain prices will be around $2.00 per bushel at the time the crop is ready for harvest. What should the company do? Show calculations.