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 22,800 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		22,800		19,800		3,000	U
Sales		$570,000		$395,200		$174,800	U
Less variable expenses
Feed		114,000		108,570		5,430	F
Veterinary fees		68,400		61,192		7,208	F
Blacksmith fees		5,700		5,183		517	F
Supplies		12,540		10,585		1,955	F
Total variable expenses		200,640		185,530		15,110	F
Contribution margin		369,360		209,670		159,690	U
Less fixed expenses
Depreciation		42,000		42,000		0
Insurance		11,000		11,000		0
Utilities		15,000		12,000		3,000	F
Repairs and maintenance		11,000		10,000		1,000	F
Labour		99,000		92,000		7,000	F
Advertisement		8,000		12,000		4,000	U
Entertainment		5,000		7,000		2,000	U
Total fixed expenses		191,000		186,000		5,000	F
Net income		$178,360		$23,670		$154,690	U

Prepare a flexible budget report for the year

Z-BAR PASTURES Income Statement Flexible Budget Report For the Year Ended December 31, 2022 Favour Unfavou Neither Fa nor Unfav Budget Actual Differe Repairs and Maintenance $ $ $ Z-BAR PASTURES Income Statement Flexible Budget Report For the Year Ended December 31, 2022 Favourable Unfavourable Neither Favourable nor Unfavourable Budget Actual Difference $ $ $ > . >