As part of a broad project designed to determine effective methods of marketing the milk produced on Iowa farms, this study examines the costs of manufacturing butter in Iowa creameries from farm-separated cream. Specifically, the effect of volume of production upon cost of manufacture is studied and analyzed. The costs of assembling the cream and of marketing the butter are excluded. In addition, the costs resulting from butterfat losses and other manufacturing losses are assumed to be constant in all the plants.

Cost data were obtained from an intensive study of the operations in 13 cooperative creameries. Output volume in these creameries ranged from 170,000 to 3,000,000 pounds of butter annually.