What Is Partial Budgeting?
The partial budget analysis is best adapted to small changes that you consider in the business. If you analyze two alternatives, the analysis does not determine that these two are the most desirable enterprises for the farm. The budget only indicates that the change will increase, decrease or not change net income. The partial budget compares the positive and negative effects of the proposed change on net income. You then separate the positive and negative effects and list them in different sections of the partial budget. Sections in a Partial Budget The partial budget is illustrated in Figure 1 as a balance which measures the positive and negative effects of a change in the business. The left side of the balance shows the positive effects on net income including additional income and reduced costs. To counterbalance this positive effect, the right side of the balance includes reduced income and additional costs or the negative effects of the proposed change. The partial budget has fou
