25 1 points eBook Problem 1-48 (Algo) Cost Data for Managerial Purposes-Budgeting (LO 1-3) Assume that The AM Bakery is preparing a budget for the month ending November 30. Management prepares the budget by starting with the actual results for August that is shown below. Then, management considers what the differences in costs will be between August and November. THE AM BAKERY Bakery sales Actual and Budgeted Costs For the Month Ending August 31 Ingredients Print Flour o References Butter Oil Fruit Nuts Chocolate Other Total ingredients Actual $ 3,960 3,560 1,880 1,480 960 1,100 700 $ 13,640 Labor Channel manager $ 5,250 Other 10,850 Utilities 2,700 Rent Marketing 3,900 200 Total bakery costs Revenues $ 36,540 52,950 Management expects revenue in November to be 30 percent higher than in August, and it expects all ingredient costs (e.g., flour, butter, and so on) to be 25 percent higher in November than in August. Management expects "other" labor costs to be 30 percent higher in November than in August, partly because more labor will be required in November and partly because employees will get a pay raise. The manager will get a pay raise that will increase his salary from $5,250 in August to $5,750 in November. Rent, utilities, and marketing costs are not expected to change. Now, fast forward to early December and assume the following actual results occurred in November: Required: a. Prepare a statement that compares the budgeted and actual costs for November. (Negative amounts should be indicated by a minus sign.) Ingredients THE AM BAKERY Bakery sales Actual and Budgeted Costs For the Month Ending November 30 Actual Budgeted Difference $ 5,100 4,750 2,180 1,700 1,350 1,480 760 $ 17,320 Flour Butter Oil Fruit Nuts Chocolate Other Total ingredients Labor Channel manager $ 5,750 Other 14,390 Utilities 2,700 Rent 3,900 Marketing 200 Total bakery costs $ 44,260 Revenues 69,125 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? Nuts, flour, and utilities Butter, other labor and oil O Flour, nuts, and butter