AGBU 2389 TERMINAL ASSESSMENT STUDY
GUIDE 2026 DETAILED SOLUTIONS TOP
GRADE
⩥ what does partial budgeting do to existing farm plans? Answer: fine
tunes them
⩥ where do you get information for your partial budgets? Answer: from
the enterprise budgets
⩥ use of a partial budget (examples) Answer: - increase the size of a
small beef herd or eliminate it
- own custom harvesting equipment or custom hire harvesting
- plant more barley and less wheat
⩥ use of a partial budget Answer: use partial budgeting to evaluate a
production change to see its financial effect on the overall farm business
⩥ what does a partial budget measure? Answer: small changes to your
operation
⩥ what can you calculate with a partial budget? Answer: the expected
change in profit from a proposed change in the farm business
,⩥ true or false: a partial budget is a form of marginal analysis Answer:
true
⩥ steps of the partial budgeting procedure Answer: 1. identify and define
the problem
2. identify alternatives
3. collect data and information
4. analyze alternatives
⩥ what questions should you ask yourself when proposing an alternative
and it is implemented? Answer: - what new or additional costs will be
incurred?
- what current costs will be reduced or eliminated?
- what new or additional revenue will be received?
- what current revenue will be lost or reduced?
⩥ additional costs Answer: costs that don't exist at the current time with
the current plan
⩥ why are additional costs incurred? Answer: - a new or expanded
enterprise requires additional inputs
- your increasing your current level of input use
- your substituting more of one input for another
,⩥ what are the kinds of additional costs that are listed on the partial
budgets? Answer: variable or fixed costs (depreciation, interest, and
taxes)
⩥ reduced revenue Answer: revenue currently being received that will
be lost or reduced if the alternative is adopted
⩥ what can cause revenue to be reduced? Answer: - if an enterprise is
eliminated or reduced in size
- if the change causes a reduction in yields or production levles
- if selling price will decrease
⩥ true or false: you don't need accurate estimates are important when
calculating reduced revenue Answer: false, they are important
⩥ what are examples of reduced revenues? Answer: yields, birth and
growth rates, and output selling prices
⩥ additional revenue Answer: revenue that will be received only if the
alternative is adopted
, ⩥ should you implate a partial budget change if it will negatively impact
your profit? Answer: no, you should only change your current plan if it
has a positive financial effect
⩥ how can you receive additional revenue? Answer: - a new enterprise is
added
- there is an increase in the size of a current enterprise
- the change will cause yields, production levels, or selling prices to
increase
⩥ reduced costs Answer: costs that are now being incurred that will no
longer exist if the alternative is adopted
⩥ where can reduced costs come from? Answer: - eliminating an
enterprise
- reducing the size of an enterprise
- reducing the input use
- subsitutiting more of one input for another
- being able to purchase inputs at a lower price
⩥ what kind of costs should be listed in the reduced costs section?
Answer: variable or fixed
GUIDE 2026 DETAILED SOLUTIONS TOP
GRADE
⩥ what does partial budgeting do to existing farm plans? Answer: fine
tunes them
⩥ where do you get information for your partial budgets? Answer: from
the enterprise budgets
⩥ use of a partial budget (examples) Answer: - increase the size of a
small beef herd or eliminate it
- own custom harvesting equipment or custom hire harvesting
- plant more barley and less wheat
⩥ use of a partial budget Answer: use partial budgeting to evaluate a
production change to see its financial effect on the overall farm business
⩥ what does a partial budget measure? Answer: small changes to your
operation
⩥ what can you calculate with a partial budget? Answer: the expected
change in profit from a proposed change in the farm business
,⩥ true or false: a partial budget is a form of marginal analysis Answer:
true
⩥ steps of the partial budgeting procedure Answer: 1. identify and define
the problem
2. identify alternatives
3. collect data and information
4. analyze alternatives
⩥ what questions should you ask yourself when proposing an alternative
and it is implemented? Answer: - what new or additional costs will be
incurred?
- what current costs will be reduced or eliminated?
- what new or additional revenue will be received?
- what current revenue will be lost or reduced?
⩥ additional costs Answer: costs that don't exist at the current time with
the current plan
⩥ why are additional costs incurred? Answer: - a new or expanded
enterprise requires additional inputs
- your increasing your current level of input use
- your substituting more of one input for another
,⩥ what are the kinds of additional costs that are listed on the partial
budgets? Answer: variable or fixed costs (depreciation, interest, and
taxes)
⩥ reduced revenue Answer: revenue currently being received that will
be lost or reduced if the alternative is adopted
⩥ what can cause revenue to be reduced? Answer: - if an enterprise is
eliminated or reduced in size
- if the change causes a reduction in yields or production levles
- if selling price will decrease
⩥ true or false: you don't need accurate estimates are important when
calculating reduced revenue Answer: false, they are important
⩥ what are examples of reduced revenues? Answer: yields, birth and
growth rates, and output selling prices
⩥ additional revenue Answer: revenue that will be received only if the
alternative is adopted
, ⩥ should you implate a partial budget change if it will negatively impact
your profit? Answer: no, you should only change your current plan if it
has a positive financial effect
⩥ how can you receive additional revenue? Answer: - a new enterprise is
added
- there is an increase in the size of a current enterprise
- the change will cause yields, production levels, or selling prices to
increase
⩥ reduced costs Answer: costs that are now being incurred that will no
longer exist if the alternative is adopted
⩥ where can reduced costs come from? Answer: - eliminating an
enterprise
- reducing the size of an enterprise
- reducing the input use
- subsitutiting more of one input for another
- being able to purchase inputs at a lower price
⩥ what kind of costs should be listed in the reduced costs section?
Answer: variable or fixed
