1. Cost Data for Managerial Purposes-Budgeting: Refer to Exhibit 1.5. Refer to Exhibit 1.5, which shows budgeted versus actual costs. Assume that Carmen's Cook- ies is preparing a budget for the month ending November 30. Management prepares the budget for the month ending November 30 by starting with the actual results for April that appear in Exhibit 1.5. Then, management considers what the differences in costs will be between April and November. Management expects cookie sales to be 100 percent greater in November than in April because of the holiday season. Management expects that all food costs (e.g., flour, eggs) will be 120 per cent higher in November than in April because of the increase in cookie sales and because prices for ingredients are generally higher in the high demand holiday months. Management expects "other" labor costs to be 120 percent higher in November than in April, partly because more labor will be required in November and partly because employees will get a pay raise. (120 per- cent higher means that the amount in November will be 220 percent of the amount in April.) The manager will get a pay raise that will increase the salary from $3,000 in April to $3,500 in November. Utilities will be 5 percent higher in November than in April. Rent will be the same in November as in April. Now, move ahead to December and assume the following actual results occurred in November: B 64,000 A 1 Number of cookies sold 2 3 Flour 4 Eggs 5 Chocolate 6 Nuts 7 Other 8 Manager's salary 9 Other labor 10 Utilities 11 Rent 12 $ 4,600 11,200 4,500 4,450 4,800 3,500 3,220 1,950 5,000 D E F Exhibit 1.5 Budget versus Actual Data Difference B C 1 CARMEN'S COOKIES 2 Retail Responsibility Center 3 Budgeted versus Actual Costs 4 For the Month Ending April 30 5 Actual Budget 6 Food 7 Flour $ 2,100 $ 2.200 8 Eggs 5,200 4.700 9 Chocolate 2,000 1.900 10 Nuts 2.000 1.900 11 Other 2,200 2.200 12 Total food $.13.500 $ 12.900 13 Labor 14 Manager 3,000 3,000 15 Other 1,500 1.500 16 Total labor $4,500 $ 4.500 17 Utilities 1,800 1.800 18 Rent 5.000 5.000 19 Total cookie costs 524.800 $ 24 200 20 Number of cookies sold 32,000 32.000 21 $ (100) 500 100 100 -O- $600 -0- -0- $-0- 0 S600 -0- Required a. Prepare a statement like the one in Exhibit 1.5 that compares the budgeted and actual costs. b. Suppose that you have limited time to determine why actual costs are not the same as budgeted costs. Which three cost items would you investigate to see why actual and budgeted costs are different? Why would you choose those three costs