Sec Green Pastures Managerial Analysis

Sec Green Pastures Managerial Analysis

Sec Green Pastures Managerial Analysis

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

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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.