ACC 561 UOPX Green pastures managerial analysis

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Question Description

Managerial Analysis

    • Due Feb 11, 11:59 PM
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    • POINTS 10
  • Scenario
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Objectives:

Purpose of Assignment

This comprehensive case requires students to evaluate a static budget and prepare flexible budgets to meet managerial needs. Students are required to calculate and analyze variances and discuss how variances are critical to managerial decision making.

Assignment Steps

Resources: Generally Accepted Accounting Principles (GAAP), U.S. Securities and Exchange Committee (SEC), Green Pastures Static Budget Income Statement

Tutorial help on Excel® and Word functions can be found on the Microsoft® Office website. There are also additional tutorials via the web offering support for Office products.

Scenario: Green 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 led to a decline in breeding activities, and it has made the boarding business extremely competitive. To meet the competition, Green Pastures 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 as an attachment. As shown, the static income statement budget for the year is based on an expected 21,900 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.

Develop a minimum 700-word examination of the financial statements and include the following:

  • Based on the static budget report:
    • What was the primary cause(s) of the loss in net income?
    • Did management do a good, average, or poor job of controlling expenses?
    • Were management's decisions to stay competitive sound?
  • Prepare a flexible budget report for the year.
  • Based on the flexible budget report:
    • What was the primary cause(s) of the loss in net income?
    • Did management do a good, average, or poor job of controlling expenses?
    • Were management's decisions to stay competitive sound?
  • What course of action do you recommend for the management of Green Pastures?

Show your work in Microsoft® Word or Excel®.

Complete calculations/computations using Microsoft® Word or Excel®.

Format the assignment consistent with APA guidelines.

Tutor Answer

JesseCraig
School: Duke University

Attached.

Running head: GREEN PASTURES MANAGERIAL ANALYSIS

GREEN PASTURES MANAGERIAL ANALYSIS
Name:
Institution affiliation:
Date:

1

GREEN PASTURES MANAGERIAL ANALYSIS

1

GREEN PASTURES MANAGERIAL ANALYSIS


There were two primary reasons for the decline in net revenue. First, the number of
boarding days reduced and second, there was a fall in the boarding charges. There was a decline
of 2900 days in the number of boarding days equivalent to 13% [(2900 days/21,900 days) x 100].
Similarly, the boarding charges declined from $25(a) per day to $20(b per day which translated to
20% [($5/$25) x 100]. The two factors resulted in the reduction in earnings of $167,500 which is
equal to 31% [($167,500/$547,500) x 100] decrease. The following are the computations of the
boarding charges per day of healthy and downturn economic:
(a)

$547,500/21,900 days = $25 per day

(b)

$380,000/19,000 days = $20 per day



Controlling Expenses
I consider the management efforts to regulate variable expenses to be poor. Since the

number of boarding days decreased by 13%, likewise the variable costs ought to reduce by the
same percentage. Alternatively, variable costs should decrease by $25,520 [($196,720 x
2,900)/21,900]. Therefore, the management’s poor work i...

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