Page > of 3 ZOOM + Static vs. Flexible Budget Analysis Project BLU-Grass Acres is a 350-acre farm on the outskirts of Louisville, Kentucky, which specializes in the boarding of broodmares and their foals. They have the capacity to board up to 75 horses. The recent economic downturn in the thoroughbred industry has made the boarding business extremely competitive in this area. To meet the competition, BLU-Grass planned in 2022 to entertain clients, advertise more extensively, and absorb expenses formerly paid by clients such as veterinary and blacksmith fees Jayzee the bookkeeper (sometimes called LAZ-E!) started to prepare some financial analysis and he remembered learning about static and flexible budgets in his college accounting class. Jayzee starts with a static budget report. Unfortunately, he doesn't know how to complete the report and management wants an analysis on the year. The static budget income statement budget for the year is based on an expected 365 boarding days per year for each horse, at a fee of $30 per mare The variable expenses per mare per day were budgeted feed $7. veterinary fees $4, blacksmith fees $0.55, and supplies $0.35. All other budgeted expenses were either semifixed or fixed, During the year, management DID NOT replace a worker who quit in June, but it did issue a new advertising brochure and did more entertaining of clients. Jayzee hires you as a consultant and needs your help, quick, to be sure he is prepared for the meeting!! > of 3 ZOOM + BLU-Grass Acres Static Budget Income Statement For the Year Ended 12/31/2022 Favorable or Actual Master Difference Unfavorable 45 68 Number of Mares Number of Boarding Days Sales 16250 $568,750 $146,250 $97,500 Variable Expenses Feed Veterinary Fees Blacksmith Fees Supplies Total Variable Expenses $5,688 $4,063 $253,500 Contribution Margin $315,250 TTCTC > of 3 0 Expenses $253,500 Contribution Margin $315,250 Less: Fixed Expenses Depreciation $40,000 Insurance $25,000 $17,000 Utilities Repairs and Maintenance $30,250 $ 40.000 $ 11,000 $ 14.000 $ 11.000 $ 95.000 $ 8,000 $ 5.000 Labor $88,000 Advertisement $35,000 Entertainment $50,000 Page