Differences between Complete and partial budgeting
|
Complete Budgeting |
Partial Budgeting |
|
It accounts for a drastic change inorganization of an operation of a farm. |
It always treats minor change |
|
All the available alternatives are considered in complete budgeting |
Only consider a few, generally two alternatives |
|
It is used for estimating the results of entire organization and operation of a farm. |
It only helps for studying net effect in terms of costs and returns or relatively minor change |
|
It is complex, tedious and takes more time for full budgeting. |
It is simple, easy and quick |
Example of Partial Budgeting
If we know the complete budgeting of wheat cultivation, we use the concept of partial budgeting in the technological change such as split dose of fertilizer application.
Table: Comparison of split doses Vs single dose of Nitrogen application to wheat crop
|
Debit |
Credit |
||||
|
a. |
Increasing cost per 10 Katha |
Rs. |
a. |
Increasing return in 10 Katha |
Rs. |
|
1.Labor for second application of urea at tillering stage required 1 hr @ Rs. 10/day |
10 |
|
1.Increase yield 1 qtl @ Rs. 1000 |
1000 |
|
|
|
2.Labor charge for third application of urea at flowering stage 1 hour @ Rs. 10/hour |
10 |
|
2.Wheat straw 150 Kg/10 Katha @ Rs. 1/Kg |
150 |
|
|
3.Threshing and cleaning required 2 hours @ Rs. 10/hour |
20 |
b. |
3.Decrease cost at 1st single 10 dose application required added 1 hour @ Rs. 10/hour |
10 |
|
|
4. Marketing of 1 qtl of added wheat yield required 1 hour @ Rs. 10/hour |
10 |
|
||
|
b. |
Decrease in return |
Nill |
|
|
|
|
|
A. Total (a+b) |
40 |
|
B. Total (a+b) |
1160 |
Net Gain = B – A = Rs. 1160 – Rs. 40 = Rs. 1140/5 Katha = Rs. 1140*3 = Rs. 3420/ha.
Example of Complete Budgeting
Table: A complete budgeting of growing wheat in one bigha of land
|
Particulars |
Cost of production (Rs. /10 Katha) |
|
A. Fixed Costs |
|
|
a. Land rent |
50 |
|
b. Building and equipment depreciation |
145 |
|
c. Interest on capital used |
225 |
|
d. Other fixed cost |
300 |
|
Total Fixed Costs (TFC) |
720 |
|
B. Variable Costs |
|
|
a. Wage of labor |
285 |
|
b. Seeds |
50 |
|
c. Urea |
375 |
|
d. Irrigation |
75 |
|
e. Insecticides |
35 |
|
Total Variable Costs (TVC) |
780 |
|
C. Total Cost = TFC + TVC |
1500 |
|
D. Gross Return |
7000 |
|
E. Net Return |
5500 |
Total Return = Rs. 7000/10 Katha = Rs. 7000*3 = Rs. 21,000/ha