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
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 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 did more entertaining of clients.
PART 1: Show Complete calculations / Computations and your work in Microsoft® Excel®.
0 comments