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Z-Bar Pastures is a 160-hectare farm on the outskirts of Swift Current, Saskatchewan, specializing in the boarding of brood mares and their foals. A recent economic downturn in the thoroughbred industry has led to a decline in breeding activities, and it has made the boarding business extremely competitive. To meet the competition, Z-Bar Pastures planned in 2020 to entertain clients, advertise more extensively, and absorb expenses formerly paid by clients, such as veterinary and blacksmith fees. The budget report for 2020 is presented below. As shown, the static income statement budget for the year is based on an expected 21,900 boarding days at $25 per mare. The variable expenses per mare per day were budgeted as follows: feed $5; veterinary fees $3; blacksmith fees $0.25; and supplies $0.55. All other expenses were either semi-fixed or fixed. During the year, management decided not to replace a worker who quit in March, but it did issue a new advertising brochure and entertained clients more. Difference 8 U 2,900 U $167,500 U 5,110 F 6,862 F 491 F. 1,867 F 4,984 Z-BAR PASTURES Static Budget Income Statement Year Ended December 31, 2020 Master Budget Actual Number of mares 60 52 Number of boarding days 21,900 19,000 Sales $547,500 $380,000 Less variable expenses Feed 109,500 104,390 Veterinary fees 65,700 58,838 Blacksmith fees 5,475 Supplies 12,045 10,178 Total variable expenses 192,720 178,390 Contribution margin 354,780 201,610 Less fixed expenses Depreciation 40,000 40,000 Insurance 11.000 11,000 Utilities 14,000 12,000 Repairs and maintenance 11,000 10,000 Labour 95,000 88,000 Advertisement 8,000 12,000 Entertainment 5.000 7,000 Total fixed expenses 184,000 180,000 Net income $170,780 $21,610 14,330 F 153.170 U 0 0 2,000 F 1,000 F 7,000 F 4,000 U 2,000 U 4,000 F $149,170 U (b) Prepare a flexible budget report for the year. (List variable costs before fixed costs. If an answer is zero, please enter 0. Do not leave any fields blank.) Z-BAR PASTURES Income Statement Flexible Budget Report For the Year Ended December 31, 2020 Fav Unfa Neither nor Un Budget Actual Difi Sales $ $ $ Less Variable Costs Feed Veterinary Fees Blacksmith Fees Supplies Total Variable Costs Contribution Margin Less Fixed Costs Depreciation Insurance Utilities Repairs and Maintenance V Labour Advertisement Entertainment Total Fixed Costs Net Income $ e Textbook and Media Save for Later Attempts: 0 of 3 used Submit

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