Marigold Corp. 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, Marigold Corp. 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 below. As shown, the static income statement budget fothe year is based on an expected 17.100 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. Marigold Corp. Static Budget Income Statement For the Year Ended December 31, 2017 Actual Master Budget Difference Number of mares 52 60 8 Unfavorable Number of boarding days 14,800 17,100 2,300 Unfavorable Sales $296,400 $427,500 $131,100 Unfavorable Less: Variable expenses Feed 81,420 85,500 4,080 Favorable Veterinary fees 45,894 51,300 3,888 4,275 Blacksmith fees Supplies 5,406 Favorable 387 Favorable 1.466 Favorable 7.939 9,405 139,141 150,480 Total variable expenses Contribution margin 11,339 Favorable 157.259 277,020 119.761 Unfavorable Less: Fixed expenses Depreciation 31.000 31,000 -O- Insurance 9.000 9.000 -0- Utilities 9,000 11.000 2,000 Favorable Repairs and maintenance 8,000 9,000 1,000 Favorable Labor 69,000 74,000 5,000 Favorable Advertisement 9,000 6,000 3,000 Unfavorable Entertainment 5,000 4,000 1.000 Unfavorable Total fixed expenses 140,000 144,000 4,000 Favorable Net income $17.259 $133,020 $115,761 Unfavorable Answer the following (b) Prepare a flexible budget report for the year. Marigold Corp. Income Statement Flexible Budget Report For the Year Ended December 31, 2017 Budget Actual Ne. oarding days (BD) 14,800 BD 14,800 BD $ $