Assignment Steps Scenario: Green Pastures is a 400-acre farm on the outskirts of the Kentucky Bluegrass, specializing...

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Scenario: Green Pastures is a 400-acre farm onthe outskirts of the Kentucky Bluegrass, specializing in theboarding of broodmares and their foals. A recent economic downturnin the thoroughbred industry has led to a decline in breedingactivities, and it has made the boarding business extremelycompetitive. To meet the competition, Green Pastures planned in2017 to entertain clients, advertise more extensively, and absorbexpenses formerly paid by clients such as veterinary and blacksmithfees.
The budget report for 2017 is presented as an attachment. Asshown, the static income statement budget for the year is based onan expected 21,900 boarding days at $25 per mare. The variableexpenses per mare per day were budgeted: feed $5, veterinary fees$3, blacksmith fees $0.25, and supplies $0.55. All other budgetedexpenses were either semifixed or fixed.
During the year, management decided not to replace a worker whoquit in March, but it did issue a new advertising brochure and didmore entertaining of clients.
Develop a 700-to 1050-word examination of thefinancial statements and include the following based on the staticbudget report:
What was the primary cause(s) of the loss in net income?
Did management do a good, average, or poor job of controllingexpenses?
Were management's decisions to stay competitive sound?
Prepare a flexible budget report for the year.
Based on the flexible budget report:
What was the primary cause(s) of the loss in net income?
Did management do a good, average, or poor job of controllingexpenses?
Were management's decisions to stay competitive sound?
What course of action do you recommend for the management ofGreen Pastures?
Show your work in Microsoft Word or Excel.
Complete calculations/computations usingMicrosoft Word or Excel.
University of PhoenixMaterial
Green Pastures
Static Budget Income Statement
For the Year Ended December 31, 2017
Actual              MasterBudget             Difference
Number ofMares                                                       52                               60                     8 U
Number of BoardingDays                                   19,000                        21,900                2,900 U
Sales                                                             $380,000                      $547,500          $167,500 U
Less: Variable Expenses
           Feed                                                    104,390                        109,500                5,110 F
           VeterinaryFees                                     58,838                          65,700                6,862 F
           BlacksmithFees                                   4,984                               5,475                 491 F
           Supplies                                              10,178                           12,045                1,867 F
Total VariableExpenses                                   178,390                        192,720              14,330 F
ContributionMargin                                          201,610                        354,780           153,170 U
Less: Fixed Expenses
           Depreciation                                        40,000                           40,000           -0-
           Insurance                                             11,000                           11,000           -0-
           Utilities                                                12,000                           14,000           2,000 F
           Repairs and Maintenance                    10,000                           11,000           1,000 F
           Labor                                                   88,000                           95,000           7,000 F
           Advertisement                                      12,000                             8,000          4,000 U
           Entertainment                                       7,000                               5,000          2,000 U
Total FixedExpenses                                       180,000                        184,000           4,000 F
NetIncome                                                      $21,610                        $170,780          $149,170 U

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3.7 Ratings (364 Votes)

1 Static budget Actual VarianceStaticActual Noof mares 60 52 8 U Noof Boarding days 21900 19000 2900 Sales at 547500 380000 167500 U LessVariable expenses Feed 109500 104390 5110 F Veterinary fees 65700 58838 6862 F Blacksmith Fees 5475 4984 491 F Supplies 12045 10178 1867 F Total Variable expenses 192720 178390 14330 F Contribution margin 354780 201610 153170 U Less Fixed expenses Depn 40000 40000 0 Ins 11000 11000 0 Utilities 14000 12000 2000 F Rep Maint 11000 10000 1000 F Labor 95000 88000 7000 F Advt 8000 12000 4000 U Entertainment 5000 7000 2000 U Total Fixed expenses 184000 180000 4000 F Net Income 170780 21610 149170 U Observations based on the See Answer

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Assignment StepsScenario: Green Pastures is a 400-acre farm onthe outskirts of the Kentucky Bluegrass, specializing in theboarding of broodmares and their foals. A recent economic downturnin the thoroughbred industry has led to a decline in breedingactivities, and it has made the boarding business extremelycompetitive. To meet the competition, Green Pastures planned in2017 to entertain clients, advertise more extensively, and absorbexpenses formerly paid by clients such as veterinary and blacksmithfees.The budget report for 2017 is presented as an attachment. Asshown, the static income statement budget for the year is based onan expected 21,900 boarding days at $25 per mare. The variableexpenses per mare per day were budgeted: feed $5, veterinary fees$3, blacksmith fees $0.25, and supplies $0.55. All other budgetedexpenses were either semifixed or fixed.During the year, management decided not to replace a worker whoquit in March, but it did issue a new advertising brochure and didmore entertaining of clients.Develop a 700-to 1050-word examination of thefinancial statements and include the following based on the staticbudget report:What was the primary cause(s) of the loss in net income?Did management do a good, average, or poor job of controllingexpenses?Were management's decisions to stay competitive sound?Prepare a flexible budget report for the year.Based on the flexible budget report:What was the primary cause(s) of the loss in net income?Did management do a good, average, or poor job of controllingexpenses?Were management's decisions to stay competitive sound?What course of action do you recommend for the management ofGreen Pastures?Show your work in Microsoft Word or Excel.Complete calculations/computations usingMicrosoft Word or Excel. University of PhoenixMaterial Green PasturesStatic Budget Income StatementFor the Year Ended December 31, 2017Actual MasterBudget DifferenceNumber ofMares 52 60 8 UNumber of BoardingDays 19,000 21,900 2,900 USales $380,000 $547,500 $167,500 ULess: Variable Expenses Feed 104,390 109,500 5,110 F VeterinaryFees 58,838 65,700 6,862 F BlacksmithFees 4,984 5,475 491 F Supplies 10,178 12,045 1,867 FTotal VariableExpenses 178,390 192,720 14,330 FContributionMargin 201,610 354,780 153,170 ULess: Fixed Expenses Depreciation 40,000 40,000 -0- Insurance 11,000 11,000 -0- Utilities 12,000 14,000 2,000 F Repairs and Maintenance 10,000 11,000 1,000 F Labor 88,000 95,000 7,000 F Advertisement 12,000 8,000 4,000 U Entertainment 7,000 5,000 2,000 UTotal FixedExpenses 180,000 184,000 4,000 FNetIncome $21,610 $170,780 $149,170 U