Question B2 Green Thumb Ltd. offers landscaping services to its clients and sources its plants in- house from the nursery it operates. The landscape designer Ms. Rosy bills her clients for the landscaping services on the basis of area designed by her. Unable to pay her workers on time she has approached you to advise her on what is ailing her business performance. She furnishes the following information for the year ending June 30, 2020. 1. The average selling price of a tulip bulb is 50 and the average rate charged to the clients for landscaping services is @200 per square foot. 2. She maintains a core team of 3 gardeners who are paid an average monthly salary of 1,000 each. Additionally she hires elderly people from the nearby old age home, as and when needed. 3. Professional accounting services are subcontracted to a firm on an annual contract of 40,000 to mainly look after the nursery accounts. The results for the year ended on 30th June 2020 are summarised below. Budget Actual Sapling sales Budgeted landscaped area Revenues Seeds, manure, water Labour hours (Old age home) Wage rate per hour Gardeners Accounting services Advertising (general) Nursery 3,000 150,000 10,000 500 3 2 40,000 4,000 Landscaping Nursery Landscaping 750 2,000 sq. ft. 400,000 2,000 3 1 30,000 7,500 220 5 2 30,000 7,500 1,000 sq. ft. 120,000 1,200 5 2 The following additional information is available about the business operations. 1. The local municipality introduced additional health and safety measures for the pesticides used for the nursery operations. This resulted in an outgoing of 10,000 towards the medical check-up for the permanent staff that is charged to general expenses. 2. A painting contracting company hired a large number of inmates from the old age home to work at various sites. This resulted in a shortage of workers who would work at the nursery. 3. Given the Brexit uncertainties lot of people had relocated to their home countries in the Europe which resulted in drop in landscaping activities. Required: a) Prepare a flexible budget for the year ended 30th June 2020. b) Comment on any two factors that need owner's attention. (25 marks) (10 marks) Total: 35 marks