Question

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 an absorb expenses formerly paid by clients such as veterinary and blacksmith fees. The budgetreport for 2017 is presented as an attachment as shown, the static income statement budget for the year is based on an expected 21,900 boarding days at $25 per mar. The variable expenses per mar per day were budgeted: feed $5, veterinary fees $3, blacksmith fees $0.25, and supplies $0.55. All other budgeted expenses were either semifixed or fixed. During the year management decided not to replace a worker who quit in March, but did issue a new advertising brochure and did more entertaining of clients. Develop a minimum of 700 word examination of the financial statements and include the following:

based on the static budget report:
* what was the primary causes of the loss in net income
* did management do a good job, average, or poorjob of controlling expenses?
* were managements decision to stay competitive sound?

prepare a flexible budget report for the year

based on the flexible budget report:
* what was the primary causes of the loss in net income?
* did management do a good job, average, or poor job of controlling expenses?
* were managements decisions to stay competitive sound?

what course of action do you recommend for the management of Green Pastures.

Answer 1