Identify the type of budget used for EACH of the following scenarios:
4.1.1 A farmer wants to add a new processing unit to the farm - NSC Agricultural Management Practices - Question 4 - 2022 - Paper 1
Question 4
Identify the type of budget used for EACH of the following scenarios:
4.1.1 A farmer wants to add a new processing unit to the farm.
4.1.2 A farmer needs seasonal ... show full transcript
Worked Solution & Example Answer:Identify the type of budget used for EACH of the following scenarios:
4.1.1 A farmer wants to add a new processing unit to the farm - NSC Agricultural Management Practices - Question 4 - 2022 - Paper 1
Step 1
4.1.1 A farmer wants to add a new processing unit to the farm.
96%
114 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
The type of budget used in this scenario is a Capital Budget. This budget is designed to evaluate investments in new projects or processing units.
Step 2
4.1.2 A farmer needs seasonal workers during the harvesting season.
99%
104 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
For this scenario, the appropriate budget is a Labour Budget. It accounts for the costs associated with hiring seasonal labor during peak harvest times.
Step 3
4.1.3 Expected flow of money as income and expenditure through an enterprise.
96%
101 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
This scenario involves a Cash Flow Budget. It tracks the expected inflows and outflows of cash within the business over a specific period.
Step 4
4.1.4 A farmer wants to have the totals of the possible income and the possible expenditure of the different production enterprises as one combined document.
98%
120 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
In this case, a Whole Farm Budget is appropriate as it consolidates all potential income and expenditures across various production enterprises into a single document.
Step 5
State THREE main features of a cash-flow budget.
97%
117 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
It indicates the timing of cash inflows and outflows, helping to manage liquidity.
It records actual income and expenses in the order they occur, rather than as per different activities.
It is typically set for a specific period, such as a season or one year.
