ACC561 Phoenix Green Pastures Static Budget Income Statement Paper Purpose of Assignment
This comprehensive case requires students to evaluate a static budget and prepare flexible budgets to meet managerial needs. Students are required to calculate and analyze variances and discuss how variances are critical to managerial decision making.
Resources
Managerial Analysis Grading Guide
Green Pastures Static Budget Income Statement
Generally Accepted Accounting Principles (GAAP), U.S. Securities and Exchange Committee (SEC)
Tutorial help on Excel® and Word functions can be found on the Microsoft Office website. There are also additional tutorials via the web offering support for Office products.
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 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 mare. The variable expenses per mare 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 it did issue a new advertising brochure and did more entertaining of clients. 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?
Show your work in Microsoft Word or Excel. Complete calculations/computations using Microsoft Word or Excel.Submit your assignment. Green Pastures Static Budget Income Statement
ACC/561 Version 7
University of Phoenix Material
Green Pastures
Static Budget Income Statement
For the Year Ended December 31, 2017
Actual
Master Budget
52
60
8U
19,000
21,900
2,900 U
$380,000
$547,500
$167,500 U
Feed
104,390
109,500
5,110 F
Veterinary Fees
58,838
65,700
6,862 F
Blacksmith Fees
4,984
5,475
491 F
Supplies
10,178
12,045
1,867 F
Total Variable Expenses
178,390
192,720
14,330 F
Contribution Margin
201,610
354,780
153,170 U
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
Number of Mares
Number of Boarding Days
Sales
Difference
Less: Variable Expenses
Less: Fixed Expenses
Total Fixed Expenses
180,000
184,000
4,000 F
Net Income
$21,610
$170,780
$149,170 U
Copyright © 2017 by University of Phoenix. All rights reserved.
1
Purchase answer to see full
attachment