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Managerial Analysis
ACC/561: Accounting
Managerial Analysis
Many tools are at managements disposal to verify information, make improvements, and
adjustments as needed for the various decisions necessary for running a successful business.
These tools include static and flexible budgets. A static budget is a budget that does not change
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regardless of variations in activity levels such as decreased revenues or increased expenses. “A
flexible budget allows management to recalculate revenue based on expenses and other factors as
time passes during the budgetary period” (Carlson, 2019, para 10). Green Pastures, which is a
large specialized boarding farm in Kentucky, has experienced a recent economic downturn.
Management has concerns regarding their operations and has asked for a review and report of
their static budget as well as the creation of a flexible budget.
Green Pasture’s Static Budget Loss of Net Income Primary Cause(s)
There are a few explanations that show the areas responsible for the loss in net income
for Green Pasture. One area was attributed to the reduction in the actual number of the boarding
days which ultimately decreased the boarding rate. The reduction of boarding rate revenue from
