Ayayai Pastures is a 400-acre farm on the outskirts of the Kentucky Bluegrass, specializing in...
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Ayayai 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 made the boarding business extremely competitive. To meet the competition, Ayayai Pastures planned in 2025 to entertain clients, advertise more extensively, and absorb expenses formerly paid by clients such as veterinary and blacksmith fees. The budget report for 2025 follows. As shown, the static income statement budget for the year is based on an expected 16,200 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. Based on the static budget report, did management do a good, average, or poor job of controlling expenses? Management did a in controlling variable expenses
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