Managerial Analysis, accounting homework help

Question Description

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®.

Final Answer

Hi there!Attached please find the completed solution to this problem in both Word and Excel, as required.Thanks again,Selenica

Green Pastures
Flexible Income Statement

Sales
Less: Variable expenses
Feed
Veterinary fees
Blacksmith fees
Supplies
Total variable expenses
Contribution margin
Less: Fixed expenses
Depreciation
Insurance
Utilities
Repairs and maintenance
Labor
Advertising
Entertainment
Total fixed expenses
Net Income

Flexible
at 19,000
$
475,000

Master
Favorable or
Variance
21900
Unfavorable
$
547,500 $ (72,500)
U

95,000
57,000
4,750
10,450
167,200
307,800

109,500
65,700
5,475
12,045
192,720
354,780

14,500
8,700
725
(1,595)
25,520
(46,980)

F
F
F
F
F
U

40,000
11,000
12,000
10,000
88,000
12,000
7,000
180,000
127,800

40,000
11,000
14,000
11,000
95,000
8,000
5,000
184,000
170,780

(2,000)
(1,000)
(7,000)
(4,000)
(2,000)
(4,000)
-42,980

0
0
U
U
U
U
U
F
Unfavorable


With four hundred acres of farmland outside the “Kentucky Bluegrass”, Green
Acres is more than just a terrible sitcom from the serialized cemetery of America’s worst
broadcasts. More specifically, it is a farm which specializes in boarding broodmare...

Selenica (1623)
UIUC

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