partial-budget - PARTIAL BUDGETING Name I The decision to...

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PARTIAL BUDGETING Name _______________________ I. The decision to participate in a government farm program can be analyzed with a partial budget. Assume a cotton grower wants to know if participation would increase profit. Assume it requires not planting 10% of the normal cotton acreage and in return the grower is guaranteed a price of $0.70 per lb. on 60% of normal acres. The government pays the grower the difference between $0.70 and the average market price on these acres. Use the following information to develop a partial budget for the decision. A. Acreage, Yield and Price Information Cotton Acres Idle Acres Cotton Yield (lb. Per acre) Estimated Market Price No Participation 500 0 600 $0.64 With 10% Participation 450 50 600 $0.64 B. Other Information 1) Participating will result in a cash government payment of: 300.0 acres X 600 lb. X (0.70 - 0.64) = $10,800.00 2) By not planting the 50 acres the grower will save the following expenses: Seed $6.00 per acre Fertilizer & chemicals $110.00 per acre
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partial-budget - PARTIAL BUDGETING Name I The decision to...

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