Things You'll Need
- Sale price with weight limits
- Delivery weight of cow
- Slide rate
Instructions
Make a contract with a buyer for the purchase of cattle in a weight range. Define the weight range price and date of delivery. Include a price slide in the agreement for overweight cattle.
Weigh the cattle on the delivery date specified in the contract. Add the total weight of all the cows. For example, if the contract was for 10 cows at 550 pounds per cow, the cows must weigh between 535 pounds to 575 pounds.
Divide the total weight by the number of cows. The contract price applies to an average weight of all the cattle. Continuing the example, if the total weight of all 10 cattle was 5870 pounds, the average weight per cow would be 587 pounds, which is outside the range.
Determine if the price slide needs inclusion by comparing the average weight of the contract with the average weight of the cows. If the average weight of the cows is below the average weight of the contract, then the price is as specified in the contract. If, however, the average weight of the cows is higher than the average weight in the contract, then the price per 100 pounds is reduced by the amount of the price slide. Continuing the example, the average of the contract was 10 cows between 525 and 575 pounds average weight, but the delivered average weight is 587 pounds. The difference is 8 pounds. The price slide amounts to the slide price times the weight over contract limits. For example, if the price slide is $0.12/cwt, then the contract price is reduced by 8 x 0.12 = $0.96/cwt. Therefore, if the original contract was for $80/cwt, the payout price would be 80 -- 0.96 = $79.04/cwt.