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 Green Pastures Static Budget Income Statement For the Year Ended December 31, 2017 Master Budget Difference Actual Number of Mares 52 60 Number of Boarding Days 2.900 19.000 21.900 Sales $167,500 U $380.000 $547.500 Less: Variable Expenses Feed 104,390 109,500 5,110 F Veterinary Feos 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 Less: Fixed Expenses Depreciation 40,000 40,000 -0- Insurance 11,000 11,000 -0- I Utilites 12,000 14,000 2,000 F Repairs and Maintenance 10,000 11,000 1,000 F Labor 95,000 7,000 F 88,000 Advertisement 4,000 U 12,000 8,000 Entertainment Z000 5,000 2.000 U Total Fixed Expenses 4.000 F 180.000 184.000 Net Income $170.780 $21.610 $149.170 U