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 are shown below. Then, management considers what the differences in costs will be between August and November. Ingredients Flour THE AM BAKERY Bakery Sales Actual Costs For the Month Ending August 31 Difference Actual Budgeted Butter 011 $ 3,900 3,500 $ 3,700 $ 200 3,400 1,700 1,800 Fruit Nuts Chocolate Other Total ingredients: Labor Channel manager Other 1,300 1,000 100 (100) 300 900 800 100 800 800 400 300 100 $12,500 $ 11,800 $700 $ 4,500 4500 10,700 10,900 (200) Utilities 2,400 2,300 100 Rent 3,600 3,600 Marketing 200 100 100 Total bakery costs $ 33,900 $33,200 $ 700 Revenues $ 52,200 $52,200 $52,200 $ 52,200 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 $4,950 in August to $5,450 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. THE AM BAKERY Bakery Sales Actual Costs For the Month Ending November 30 Ingredients Flour Butter 011 Fruit Nuts Chocolate Other Actual $ 5,040 4,690 2,120 1,640 1,290 1,300 640 Total ingredients Labor Channel manager Other Utilities $ 16,720 $ 5,450 14,282 2,580 Now, fast-forward to early December and assume the following actual results occurred in November. THE AM BAKERY Bakery Sales Actual Costs For the Month Ending November 30 Ingredients Flour Butter 011 Fruit Nuts Chocolate Other Total ingredients Labor Channel manager Other Actual $ 5,040 4,690 2,120 1,640 1,290 1,300 640 $ 16,720 $ 5,450 14,282 2,580 3,780 Utilities Rent Marketing 200 Total bakery costs Revenues $ 43,012 $ 68,675 Required: a. Prepare a statement that compares the budgeted and actual costs for November. < Prev 8 of 8 Next a. Prepare a statement that compares the budgeted and actual costs for November. 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? Complete this question by entering your answers in the tabs below. Required A Required B Prepare a statement that compares the budgeted and actual costs for November. Note: Negative amounts should be indicated by a minus sign. Ingredients Flour THE AM BAKERY Bakery Sales Actual and Budgeted Costs For the Month Ending November 30 Actual Budgeted $ 5,040 Difference THE AM BAKERY Bakery Sales Actual and Budgeted Costs For the Month Ending November 30 Actual Budgeted Ingredients Flour $ 5,040 Butter 4,690 Oil 2,120 Fruit 1,640 Nuts 1,290 Chocolate 1,300 Other 640 Total ingredients $ 16,720 $ 0 Labor Channel manager $ 5,450 Other 14,282 Difference < Prev 8 of 8 Next Oil 2,120 Fruit 1,640 Nuts 1,290 Chocolate 1,300 Other Total ingredients A 640 16,720 $ Labor Channel manager $ 5,450 Other 14,282 Utilities 2,580 Rent 3,780 Marketing 200 Total bakery costs $ 43,012 Revenues $ 68,675