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 3,935 3,535 1,735 1,335 Butter Oil Fruit Nuts 935 Chocolate 835 Other 435 Total ingredients $ 12,745 Labor Channel manager $4,850 10,735 2,540 3,740 Other Utilities Rent Marketing Total bakery costs 200 $34,810 Revenues 52,550

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 $4.850 in April to $5.700 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 Required: a. Prepare a statement that compares the budgeted and actual costs. (Negative amounts should be indicated by a minus sign) THE AM BAKERY Bakery sales Actual and Budgeted Costs For the Month Ending December 31 Actual Budgeted Difference 5 8.535 7.750 3,901 3.089 2.184 1.670 920 Ingredients Flout Butter Od Fruit Nuts Chocolate Other Total ingredients Labor Channel manager Other Utilities Rent Marketing Total bakery costs Revenues $ 28.0495 $ 5,700 24471 3,550 3.740 217 65 727 103.725 $