QUESTION ONE (20 MARKS) a) What are FOUR (4) fundamental questions that should be answered before preparing a partial budget? (4 marks) b) Aida is considering switching from dry land paddy to irrigated paddy. This producer currently farms 10 hectare of dry land paddy and would convert the whole 10 hectare of this land to irrigated paddy. Irrigation equipment necessary for the change would have an original cost of RM10,000. A dry land paddy yield of 6 tones (6,000 kg) per hectare. The irrigated paddy is expected to have a yield of 8 tones (8.000 kg) per hectare. Fertilizer, fuel and chemicals, and labour costs are expected to increase with irrigation, as shown below. Dry land paddy Irrigated land paddy Fertilizer RM80/ha RM100/ha Fuel and chemicals RM70/ha RM90/ha Labour RM30/ha RM40/ha Inputs Paddy is expected to be sell at the price of RM1.40 per kilogram, regardless of whether it is produced prom dry land or irrigated land. The proposed change will cause additional fixed costs as well as additional variable costs. Depreciation of equipment is about RM1,600 per year, payment of interest on the equipment comes out RM1,000 per year, and additional insurance for the machinery would cost RM60 per year. Additional variable costs include the cost of fertilizer, fuel and chemicals, and labour. The reduced revenue would result from the loss of the sale of dry land paddy, and the additional revenue will be received from the sale of the irrigated paddy. With the information, prepare the Partial Budget for this paddy farmer. 1) Additional costs (2 marks) ii) Reduced revenue (2 marks) iii) Reduced costs (2 marks) iv) Additional revenue (2 marks) v) Net change in profit 1 (2 marks) vi) From the information from (i) to (v), what is your suggestion to Aida? (2 mal vii) Explain the important of Partial Budget analysis in Agribusiness