chapter11 - Farm Management Chapter 11 Partial Budgeting...

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Farm Management Chapter 11 Partial Budgeting
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farm management chapter 11 2 Chapter Outline Uses of a Partial Budget Partial Budgeting Procedure The Partial Budget Format Partial Budgeting Examples Factors to Consider when Computing Changes in Revenue and Costs Sensitivity Analysis Limitations of Partial Budgeting Final Considerations
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farm management chapter 11 3 Chapter Objectives 1. To discuss the purpose of a partial budget 2. To emphasize the many possible uses of a partial budget 3. To illustrate the format of a partial budget 4. To show what types of entries are made on a partial budget 5. To note the importance of including only changes in revenue and expenses 6. To demonstrate the use of partial budgets with several examples
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farm management chapter 11 4 Uses of a Partial Budget A partial budget is often the best way to analyze a change in operations involving several different enterprises. A partial budget provides a formal and consistent method for calculating the expected change in profit from a proposed change in the farm business. It is a form of marginal analysis.
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farm management chapter 11 5 Figure 11-1 Partial budgeting and marginal analysis
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6 Partial Budgeting Procedure 1. What new or additional costs will be incurred? 2. What current costs will be reduced or eliminated? 3. What new or additional revenue will be
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chapter11 - Farm Management Chapter 11 Partial Budgeting...

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