Assume that The 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.

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 $4,500 in August to $5,000 in November. Rent, utilities, and marketing costs are not expected to change.

Required:

Prepare a statement that compares the budgeted and actual costs for November.

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?

THE AM BAKERY Bakery Sales Actual Costs For the Month Ending August 31 Actual Budgeted Difference Ingredients Flour Butter Oil Fruit Nuts Chocolate other Total ingredients Labor Channel manager Other Utilities Rent Marketing Total bakery costs Revenues Complete this question by entering your answers in the tabs below. Prepare a statement that compares the budgeted and actual costs for Fovember. Motes Wegathe armounts should be indicafed bra minus sign