Economics T5 - Partial budgets

Question 1

Fixed costs are never included on a partial budget.

True

False

Answer 1

false

Question 2

A partial budget would be the most useful type of budget for estimating

the amount of borrowing required for the next year

the break even price needed to cover all costs of cotton production

labor needed on the farm during the next year

the change in profit from installing an irrigation system in one field

Answer 2

the change in profit from installing an irrigation system in one field

Question 3

The better alternative as shown on a partial budget is sure to be the one which maximizes profit for the business.

True

False

Answer 3

false

Question 4

On a partial budget analyzing a change from cow-calf production to stocker-production, using the same pasture acreage and facilities, which of the following would be included as a reduced cost?

cull cow sales

feeder cattle purchases X

a fixed interest charge for ownership of breeding livestock

pasture rent

Answer 4

.

Question 5

A partial budget can be used to evaluate one specific change in an operation.

True

False

Answer 5

true

Question 6

A partial budget is an appropriate tool for analyzing

the expansion of an existing enterprise

the profit or loss from a single enterprise

the cash flows in the business

the start up costs in a new business

Answer 6

the expansion of an existing enterprise

Question 7

Opportunity costs are never included on a partial budget.

True

False

Answer 7

false

Question 8

A partial budget includes only those costs and revenues which will change if the proposed alternative is adopted.

True

False

Answer 8

true

Question 9

A single partial budget can analyze up to four alternatives.

True

False

Answer 9

False. Only two - do it or don’t do it

Question 10

Change in profit is the only factor to consider when looking at the results of a partial budget.

True

False

Answer 10

false

Question 11

Which of the following are the profit decreasing changes on a partial budget?

additional costs and additional revenue

additional costs and reduced revenue

reduced costs and additional revenue

reduced costs and reduced revenue

Answer 11

additional costs and reduced revenue

Question 12

Which of the following are the profit increasing changes on a partial budget?

additional costs and additional revenue

reduced costs and reduced revenue

reduced costs and additional revenue

additional costs and reduced revenue

Answer 12

reduced costs and additional revenue

Question 13

A partial budget analyzes only two management alternatives at one time.

True

False

Answer 13

True

Question 14

Only changes in variable or operating costs are included on a partial budget.

True

False

Answer 14

false

Question 15

Only cash expenses are shown on a partial budget.

True

False

Answer 15

false

Question 16

Most partial budgets will need to include some opportunity costs.

True

False

Answer 16

true

Question 17

On a partial budget, costs and returns must be included for all enterprises on the farm.

True

False

Answer 17

false

Question 18

A partial budget is designed to analyze the effect of a proposed change on

economic profit

business risk X

liquidity of the business

accounting profit

Answer 18

.

Question 19

Not all partial budgets will need to include some fixed ownership costs.

True

False

Answer 19

true

Question 20

Changing a crop rotation to plant 80 hectares more barley and 80 hectares less wheat would be a decision which could be analyzed using a partial budget.

True

False

Answer 20

true

Question 21

If the partial budget includes purchasing a new machine, there should be additional fixed costs in the budget.

True

False

Answer 21

true

Question 22

On a partial budget which analyzes switching 120 acres from growing wheat to growing barley, which of the following costs should NOT be included on the budget?

seed expense for either crop

fertilizer for the barley X

fertilizer for the wheat

property tax on the land

Answer 22

I’d say its property tax but let me check (didn’t see the “not”)

Question 23

The values shown on a partial budget are

total revenue and total expenses for the farm

only total expenses for the farm

only total revenue for the farm

only changes in revenues and expenses

Answer 23

only changes in revenues and expenses

Question 24

If a partial budget shows some fixed or ownership costs under Reduced Costs, it means

the proposed alternative requires purchasing a new capital asset

a new capital asset must be purchased next year with either alternative

the proposed alternative would allow sale of a capital asset that will no longer be needed

there is an error on the budget as fixed costs are never included under Reduced Costs X

Answer 24

.