Question

I need to see the calculations

Green Pastures Static Budget Income Statement For the Year Ended December 31, 2017 Difference Master Budget Actual BU 60 52 Number of Mares 2.900 U 21.900 Number of Boarding Days 19.000 $167 500 U $547.500 Sales $380.000 Less: Variable Expenses 5,110 F 109,500 Feed 104,390 6,862 F 58,838 65,700 Veterinary Foos Blacksmith Fees 4,984 5,475 491 F 12.045 10.178 Supplies 1.867 F 178.390 192.720 Total Variable Expenses 14.330 F 354 780 201.610 Contribution Margin 153.170 U Less: Fixed Expenses Depreciation 40,000 40,000 0 Insurance 11,000 11,000 -0- Uuses I 12,000 14,000 2,000 F Repairs and Maintenance 10,000 11.000 1,000 F Labor 68,000 7,000 F 95,000 Advertisement 8.000 4,000 U 12,000 Entertainment 5.000 Z.000 2.000 U Total Fixed Expenses 184.000 4,000 F 180.000 Net Income $170 780 $149.170 U $21.610 Assignment Steps Scenario: Green Pastures is a 400-acre farm on the outskirts of the Kentucky Bluegrass, specializing in the boarding of broodmares 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, Green Pastures planned in 2017 to entertain clients advertise more extensively, and absorb expenses formerly paid by clients such as veterinary and blacksmith fees. The budget report for 2017 is presented an expected 21,900 boarding days at $25 per mare. The variable expenses per mare per day fees $3, blacksmith fees $0.25, and supplies $0.55. All other budgeted expenses were either semifixed or fixed. as an attachment. As shown, the static income statement budget for the year is based on budgeted: feed $5, veterinary were During the year, management decided not to replace a worker who quit in March, but it did issue a new did more entertaining of clients. advertising brochure and Develop a 700-to 1050-word examination of the financial statements and include the following based on the static budget report: What was the primary cause(s) of the loss in net income? Did management do a good, average, or poor job of controlling expenses? .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 controlling expenses? Were management's decisions to stay competitive sound? What course of action do you recommend for the management of Green Pastures? C

Answer 1

Green Pastures 2 Static Budget Income Statment 3 For the Year Ended December 31,2017 4 Master Budget ( B) Actual (A) Difference (B- A) 8 (UF) 2900 (UF) 5 Number of Mares (A) 6 52 60 Number of Boarding Days (B) Sales (B 25) (1) 7 19000 21900 547500 167500 (UF) 8 380000 Less Variable expenses Feed (B *5) Veterinary Fees( B *3) Blacksmith Fees( B.25) 5110 (F) 6862 (F) 10 104390 109500 11 58838 65700 491 (F) 12 4984 5475 1867 (F) 14330 (F) Supplies( B.55) 13 10178 12045 Total Variable Expenses (2) 14 178390 192720 153170 (UF) Contribution Margin (1- 2) (3) 201610 354780 15 Less Fixed expenses 16 17 Depreciation 40000 40000 0 11000 11000 18 Insurance 2000 (F) 1000 (F Utilities 14000 19 12000 Repairs and Maintenance 20 10000 11000 7000 (F Labor 21 88000 95000 4000 (UF) 22 Advertisement 8000 12000 2000 (UF) 4000 (F 23 Entertainment 7000 5000 Total Fixed Expenses (4) 184000 24 180000 149170 (UF) Net Income (3-4) 170780 25 21610

When Master Budget is more and actual budget is less for sales then it is (UF) .But when master budget is higher 27 and actual budget is less for expenses then it is (F) and reverse for (UF) 28 29 30