Economics T5 - Partial budgets Flashcards
Fixed costs are never included on a partial budget.
True
False
false
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
the change in profit from installing an irrigation system in one field
The better alternative as shown on a partial budget is sure to be the one which maximizes profit for the business.
True
False
false
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
.
A partial budget can be used to evaluate one specific change in an operation.
True
False
true
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
the expansion of an existing enterprise
Opportunity costs are never included on a partial budget.
True
False
false
A partial budget includes only those costs and revenues which will change if the proposed alternative is adopted.
True
False
true
A single partial budget can analyze up to four alternatives.
True
False
False. Only two - do it or don’t do it
Change in profit is the only factor to consider when looking at the results of a partial budget.
True
False
false
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
additional costs and reduced revenue
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
reduced costs and additional revenue
A partial budget analyzes only two management alternatives at one time.
True
False
True
Only changes in variable or operating costs are included on a partial budget.
True
False
false
Only cash expenses are shown on a partial budget.
True
False
false
Most partial budgets will need to include some opportunity costs.
True
False
true
On a partial budget, costs and returns must be included for all enterprises on the farm.
True
False
false
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
.
Not all partial budgets will need to include some fixed ownership costs.
True
False
true
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
true
If the partial budget includes purchasing a new machine, there should be additional fixed costs in the budget.
True
False
true
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
I’d say its property tax but let me check (didn’t see the “not”)
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
only changes in revenues and expenses
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
.
