Z-Bar Pastures is a 160-hectare farm on the outskirts of Swift Current, Saskatchewan, specializing in the boarding of brood mares 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, Z-Bar 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 is presented below. As shown, the static income statement budget for the year is based on an expected 19,700 boarding days at $25 per mare. The variable expenses per mare per day were budgeted as follows: feed $5; veterinary fees $3; blacksmith fees $0.25; and supplies $0.55. All other expenses were either semi-fixed 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 entertained clients more.

Z-BAR PASTURES Static Budget Income Statement Year Ended December 31, 2022
		Master Budget		Actual		Difference
Number of mares		60		52		8	U
Number of boarding days		19,700		17,100		2,600	U
Sales		$492,500		$342,000		$150,500	U
Less variable expenses
Feed		98,500		93,950		4,550	F
Veterinary fees		59,100		52,954		6,146	F
Blacksmith fees		4,925		4,486		439	F
Supplies		10,835		9,160		1,675	F
Total variable expenses		173,360		160,550		12,810	F
Contribution margin		319,140		181,450		137,690	U
Less fixed expenses
Depreciation		36,000		36,000		0
Insurance		10,000		10,000		0
Utilities		13,000		11,000		2,000	F
Repairs and maintenance		10,000		9,000		1,000	F
Labour		86,000		79,000		7,000	F
Advertisement		7,000		11,000		4,000	U
Entertainment		5,000		6,000		1,000	U
Total fixed expenses		167,000		162,000		5,000	F
Net income		$152,140		$19,450		$132,690	U

Prepare a flexible budget report for the year.

with work notes please