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A Case Study on

Baron Coburg

Submitted in Partial Fulfillment


Of the Requirements in
Financial Accounting (ACC5000)

Submitted to

Professor Virgilio Avila

Submitted by
Group 1
J. Voltaire Enriquez
Vic Tolosa

Background of the Case

The case of Baron Coburg is about a feudal landlord, who lived,


once upon a time, in a small province in Western Europe.

He is responsible for the well-being of many peasants who


occupied the lands surrounding his castle.

The Baron decides on the manner that will allow him to produce
enough bushels of wheat for consumption of all his peasants for the
coming year.

Baron’s Assumption

 30 acres of land will produce enough wheat for all the peasants
during the coming year.

Other Resources Needed and their Values (Currency = Bushels).


 Wheat for Seed
 Fertilizer (1 Bushel = 10 Pounds)
 Ox (40 Bushels, with a lifespan of 10 years)
 Plow (3 Bushels, to be bought from Feyador)
Two (2) peasants, Ivan and Frederick, were assigned to work on
the 30 Acres of Land, after having been given varying amounts of
resources.

They were instructed to come back next fall and return the oxen
and the plows along with their respective harvests.

Statement of the Problem

Who, between Ivan and Frederick, is the better farmer?

Baron Coburg Case 2


Group 1
ACC5000
Areas of Considerations:

The Baron believes that 30 acres of land, being worth five bushels
of wheat per acre, will produce enough wheat for next winter.

Ivan was assigned to farm a 20-acre plot of ground and was given
the following resources:

Resource Unit Value (In Bushels)


Land 20 Acres 100
Wheat for Seed Bushels 20
Fertilizer 20 Pounds 2
Ox (Good for 10 Years) 40

Frederick was assigned to farm a 10-acre plot and was given the
following resources:

Resource Unit Value (In Bushels)


Land 10 Acres 50
Wheat for Seed Bushels 10
Fertilizer 10 Pounds 1
Ox (Good for 10 Years) 40

After the harvest, Ivan and Frederick returned to the Great Hall to
account to the Baron the things given to them in spring.

Ivan presented the following:

Resource Unit Value (In Bushels)


Land 20 Acres 100
Ox Good for 9 years 36
Plow Broken beyond Repair 0
Wheat Advanced to Baron 20
Wheat Balance 223

Baron Coburg Case 3


Group 1
ACC5000
Frederick presented the following:

Resource Unit Value (In Bushels)


Land 10 Acres 50
Ox Good for 9 years 36
Plow Good for 2 Seasons 2
Wheat Advanced to Baron 30
Wheat Balance 105

Objectives of the Case

To assist the Baron in identifying who between the two farmers


did better.

Present to the Baron balance sheets as of the beginning and end


of the growing season, as well as the income statement for the
season for each farm.

Analysis

Beginning Balance sheets:


Ivan
Ivan by Ivan
Plot Farmed
Balance
Balance Sheet
Balance Sheet
Sheet
As
As of
of __________, Bal
__________, (Beginning
(Beginning of
of the
the Season)
Season)
(In
(In Bushels
Bushels of
of Wheat)
Wheat)

Assets
Assets Liabilities
Liabilities ++ Owner's
Owner's Equity
Equity

Land
Land 100
100 Liability to
to Baron
Contributed
Liability Capital
Baron 162
162
Wheat
Wheat (for
(for Seed)
Seed) 20
20
Fertilizer
Fertilizer 22
Ox
Ox 40
40
Total
Total Liabilities
Liabilities and
and
Total
Total Assets
Assets 162
162 Owner's
Owner's Equity
Equity 162
162

Baron Coburg Case 4


Group 1
ACC5000
Frederick
Frederick
Plot Farmed by Frederick
Balance
Balance
BalanceSheet
Sheet
Sheet
As of __________, (Beginning
As of __________, (Beginning
Bal of
of the
the Season)
Season)
(In
(In Bushels
Bushels of
of Wheat)
Wheat)

Assets
Assets Liabilities
Liabilities ++ Owner's
Owner's Equity
Equity

Land
Land 50
50 Contributed
Liability
Liability to Capital
to Baron
Baron 101
101
Wheat
Wheat (for
(for Seed)
Seed) 10
10
Fertilizer
Fertilizer 11
Ox
Ox 40
40
Total
Total Liabilities
Liabilities and
and
Total
Total Assets
Assets 101
101 Owner's
Owner's Equity
Equity 101
101

Ending Balance Sheets:


Ivan
Ivanby Ivan
Plot Farmed
Balance Sheet
BalanceSheet
Balance Sheet
As
As of
of __________,
Bal
__________, (End
(End of
of the
the Season)
Season)
(In
(In Bushels
Bushels of
of Wheat)
Wheat)

Assets
Assets Liabilities
Liabilities ++ Owner's
Owner's Equity
Equity

Land
Land 100
100 Payable
Payable (Plow)
(Plow) 33
Ox
Ox 36
36 Liability
Liability to
Contributed to Baron
Baron
Capital 162
162
Plow
Plow 00 Retained Earnings
RetainedEarnings
Earnings 214
214
Retained 194
Advance
Advance to
Wheat to Baron
Baron 20
20
223
Wheat
Wheat _________
223
223
Total
Total Liabilities
Liabilities and
and
Total
Total Assets
Assets 359
379
379 Owner's
Owner's Equity
Equity 359
379
379

Frederick
Frederick
Plot Farmed by Frederick
Balance
Balance Sheet
Sheet
Balance Sheet
As
As of __________, (End
of __________, Bal of
(End of the
the Season)
Season)
(In
(In Bushels
Bushels of
of Wheat)
Wheat)

Assets
Assets Liabilities
Liabilities ++ Owner's
Owner's Equity
Equity

Land
Land 50
50 Contributed Capital 101
Ox
Ox 36
36 Liability
Liability to
to Baron
Baron 101
101
Plow
Plow 22 Retained
Retained Earnings
Earnings
Retained Earnings 92
122
122
Advance
Advance to
Wheat to Baron
Baron 30
30
105
Wheat
Wheat _________
105
105
Total
Total Liabilities
Liabilities and
and
Total
Total Assets
Assets 193
223
223 Owner's
Owner's Equity
Equity 193
223
223

Baron Coburg Case 5


Group 1
ACC5000
Income Statements

Ivan
Ivan by Ivan
Plot Farmed
Income
Income Statement
Income Statement
Statement
For
For the SeasonBal
the Season Ending
Ending _____
_____
(In
(In Bushels
Bushels of
of Wheat)
Wheat)

Wheat
Wheat 243
243
Less:
Less: Cost
Cost ofof Production
Production
Wheat
Wheat (for Seed)
(for Seed) 20
20
Fertilizer
Fertilizer 22
Ox
Ox (Partial
(Partial Depreciation)
Depreciation) 44
Plow
Plow (Full
(Full Depreciation)
Depreciation) 33 29
29

Net
Net Income
Income 214
214

Frederick
Frederick
Plot Farmed by Frederick
Income
Income Statement
Income Statement
Statement
Bal
For
For the
the Season
Season Ending
Ending _____
_____
(In
(In Bushels
Bushels of
of Wheat)
Wheat)

Wheat
Wheat 138
138
Less:
Less: Cost
Cost ofof Production
Production
Wheat
Wheat (for
(for Seed)
Seed) 10
10
Fertilizer
Fertilizer 11
Ox
Ox (Partial
(Partial Depreciation)
Depreciation) 44
Plow
Plow (Partial Depreciation)
(Partial Depreciation) 11 16
16

Net
Net Income
Income 122
122

Baron Coburg Case 6


Group 1
ACC5000
Alternatives

A. Efficiency based on the size of the land

Frederick is the better farmer. His 10-acre plot produced 138


bushels. The cost of producing the 138 bushels was 16 bushels or
11.59% of the gross harvest. His earnings for the 10 acres plot
reached 122 bushels or 88.41% of the gross harvest.

While Ivan’s 20-acre plot of land produced only 243 bushels –


less than double the produce of Frederick. The cost of producing the
243 bushels was 29 bushels or 11.93% of the gross harvest. His
earnings were equivalent to 214 bushels or 88.07% of the gross
harvest.

B. Efficiency based on the input in bushels

1. Ivan is the better farmer. It only needed 0.76 of a bushel for


Ivan to produce 1 bushel or for every 1 bushel given by the Baron,
he returned 1.32 bushels.

While Frederick needed 0.83 bushel to produce 1 bushel or for


every 1 bushel given by the Baron, he returned only 1.21 bushels. He
under-utilized his ox by 50% compared to Ivan.

2. Had Frederick been given a 20-acre land as well, assuming


he produced 276 bushels, (twice that of the 10-acre output), and his
cost of production is the same as Ivan’s, he is the better farmer
because he’ll only need 0.66 of a bushel to produce 1 bushel or 1.52
bushels produced for every bushel given by the Baron.

Recommendation
Baron Coburg Case 7
Group 1
ACC5000
We recommend that the Baron choose Frederick as the better
farmer and give him a 20-acre land to toil. In essence, it would take
Frederick only 0.66 bushel to produce 1 bushel of wheat.

Conversely, it would take 0.76 bushel of wheat for Ivan to


produce 1 bushel of wheat.

Baron Coburg Case 8


Group 1
ACC5000