Marginal analysis is the principle of maximizing profit by looking at the entire cost of production.
When making a partial change within an operation that has existed well for a while, it may be wise to closely view just that part. Partial budgeting can begin with a listing of pros and cons for the planned change. The total pros should outweigh the cons over the long-run. The following chart is an example of this practice reflecting a thought to increase the number of livestock in an existing operation.
| Pros | Cons | ||
|---|---|---|---|
| Increased income from more stock sales | $___ | Decreased income from hay sales | $___ |
| Decrease expenses in haying process and storage rooms. | $___ | Increase in expenses for purchasing stored feed | $___ |
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| Total: | $___ | $___ | |
