a. Based on the static budget report:1. What was the primary cause(s) of the loss in net income?2. Did management do a good, average, or poor job of controlling expense?3. Were management’s decisions to stay competitive sound?b. Prepare a flexible budget report for the year.c. Based on the flexible budget report, answer the three questions in part (a) above.d. What course of action do you recommend for the management of Alps Pastures Flexible Budget and Variance AnalysisProblemAlps Pastures is a 400-acre farm on the outskirts of New Zealand, specializing in the boarding ofbroodmares and their foals. A recent economic downturn in the thoroughbred industry has led to adecline in breeding activities, and it has made the boarding business extremely competitive. to meetthe competition, Alps Pastures planned in 2014 to entertain clients, advertise more extensively, andabsorb expenses formerly paid by clients such as veterinary and blacksmith fees.The budget report for 2019 is presented below. As shown, the static income statement budget for theyear is based on an expected 21,900 boarding days at $25 per mare. The variable expenses per mareper day were budgeted: fee $5, veterinary fees $3, blacksmith fees, $0.25, and supplies $0.55. All otherbudgeted 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 newadvertising brochure and did more entertaining of clients.Alps PasturesStatic Budget Income StatementFor the year ended December 31, 2019ActualMaster BudgetDifferenceNumber of mares5260Number of boarding days19,00021,9002,900USales$380,000$547,500$167,500 ULess: Variable expensesFeed104,390109,5005,110Veterinary fees58,83865,7006,862FBlacksmith fees4,9845,475491FSuppliesTotal Variable expensesContribution margin10,178178,390201,61012,0451,86714,330153,170192,720F354,780Less: Fixed expensesDepreciationInsurance40,00011,00040,00011,000Utilities12,00014,0002,000FRepairs and maintenance10,00011,0001,000FLabor88,00095,0007,000FAdvertisement12,0008,0004,000Entertainment7,000180,0005,0002,000Total Fixed Expenses184,0004,000FNet Income$21,610$170,780$149,170 URequired:a. Based on the static budget report:1. What was the primary cause(s) of the loss in net income?2. Did management do a good, average, or poor job of controlling expense?3. Were management's decisions to stay competitive sound?b. Prepare a flexible budget report for the year.c. Based on the flexible budget report, answer the three questions in part (a) above.d. What course of action do you recommend for the management of Alps Pastures?

Name: a. Based on the static budget report:1. What was the primary cause(s)
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Description: a. Based on the static budget report:1. What was the primary cause(s) of the loss in net income?2. Did management do a good, average, or poor job of controlling expense?3. Were management’s decisions to stay competitive sound?b. Prepare a flexible bu