Ok ences 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 Flour Butter OLL Fruit Nuts Chocolate Other Total ingredients Channel manager Labor Other Utilities Rent Actual $ 3,940 3,540 1,820 1,420 940 1,000 600 $ 13,260 $ 5,000 10,000 2,600 3,000 Marketing Total bakery costs Revenues 200 $ 35,660 52,700 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 $5,000 in August to $5,500 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: 1 Required: a. Prpare a statement that compares the budgeted and actual costs for November (Negative amounts should be indicated by a minus sign.) 2 11 points Bock 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.) THE AM BAKERY Bakery sales Actual and Budgeted Costs For the Month Ending November 30 Actual Budgeted Difference Ingredients References Flour S 5.050 Butter 4,700 Ol 2.130 Fruit 1,660 Nuts 1,300 Chocolate 1,330 4 Other 660 Total ingredients S 16,020 $ of Labor Channel manager S 5,500 $ 14.300 Other Untities 2.600 Rent 3,000 Marketing 200 Total bakery costs Revenues $ 43.220 68.750 Mc 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? Flour, nuts, and butter < Prev 11 of 15 Next >