Assume that The AM Bakery is preparing a budget for the month ending December 31. Management prepares the budget for the month ending December 31 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 December. THE AM BAKERY Bakery sales Actual and Budgeted Costs For the Month Ending August 31 Actual Ingredients Flour Butter Oil Fruit Nuts Other $ 3,900 3,500 1,700 1,300 900 Chocolate Total ingredients 800 400 $ 12,500 Labor Channel manager $ 4,500 Other Utilities Rent Marketing 10,700 2,400 3,600 200 Total bakery costs Revenues $ 33,900 52,200 Management expects revenue to be 100 percent greater in December than in August because of the holiday season. Management expects that all food costs (e.g., flour, butter, and so on) will be 120 percent higher in December than in August because of the increase in sales and because prices for ingredients are generally higher in the high demand holiday months. Management expects other labor costs to be 130 percent higher in December than in August, partly because more labor will be required in December and partly Management expects revenue to be 100 percent greater in December than in August because of the holiday season. Management expects that all food costs (e.g., flour, butter, and so on) will be 120 percent higher in December than in August because of the increase in sales and because prices for ingredients are generally higher in the high demand holiday months. Management expects "other" labor costs to be 130 percent higher in December than in August, partly because more labor will be required in December and partly because employees will get a pay raise. The manager will get a pay raise that will increase his salary from $4,500 in April to $5,000 in December. Utilities will be 15 percent higher in December than in August. Rent and marketing will be the same in December as in August. Now, move ahead to January of the following year and assume the following actual results occurred in December: Ingredients THE AM BAKERY Bakery sales Actual and Budgeted Costs For the Month Ending December 31 Actual Budgeted Difference S Flour Butter Oil Fruit Nuts Chocolate Other Total ingredients $ 8,465 7.680 3,800 3,125 2,200 1,600 850 $ 27,720 Labor Channel manager $ 5,000 Other 24,400 Utilities 3,125 Rent Marketing Total bakery costs Revenues 3,600 210 S 64,055 103,200 10