Ivanhoe 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 made the boarding business extremely competitive. To meet the competition, Ivanhoe Pastures planned in 2022 to entertain clients, advertise more extensively, and absorb expenses formerly paid by clients such as veterinary and blacksmith fees. The budget report for 2022 follows.As shown, the static income statement budget for the year is based on an expected 22,800 boarding days at $25 per ma re. 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 semixed 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. IVANHOEPASTU RES Static Budget Income Statement For the Year Ended December 31. 2020 Actual Master Budget Difference Number of mares 52 60 8 Unfavorable Number of boarding days 19,800 22,800 3,000 Unfavorable Service revenue $396,000 $570,000 $174,000 U nfavorable Less: Variable expenses Feed 108,5 70 1 14,000 5,430 Favorable Veterinary fees 61,192 68,400 7,208 Favorable Blacksmith fees 5,183 5,700 517 Favorable Supplies 10,585 12,540 1,955 Favorable Total variable expenses 185,5 30 200,640 15,110 Favorable Contribution margin 210,470 369,360 158,890 Unfavorable Less: Fixed expenses Depreciation 42,000 42,000 0 Insurance 11,000 11,000 0 Utilities 12,000 15,000 3,000 Favorable Repairs and maintenance 10,000 11,000 1,000 Favorable Labor 92,000 99,000 7,000 Favorable Advertisement 12,000 8,000 4,000 U nfavorable Entertainment 7,000 5,000 2,000 Unfavorable Total xed expen ses 186,000 191,000 5,000 Favorable Net income $24,470 $178,360 $153,890 Unfavorable