Assume that The AM Bakery is preparing a budget for the month ending October 31. Management prepares the budget by starting with the actual results for August 31. Next, management considers what the differences in costs will be between August and October. Management expects revenue in October to be 15 percent more than in August, and it expects all ingredient costs (e.g., flour, butter, and so on) to be 15 percent higher in October than in August. Management expects other labor costs to be 20 percent higher in October than in August, partly because more labor will be required in October and partly because employees will receive a pay raise. The manager will receive a pay raise that will increase his salary from $5,900 in August to $6,540 in October. Rent, utilities, and marketing costs are not expected to change. Required: Prepare a budget for The AM Bakery for October. THE AM BAKERY Bakery Sales Budgeted Costs For the Month Ending October 31 Actual Budgeted (October) (August) Ingredients Flour $ 5,300 4,900 Butter Oil Fruit Nuts 3,100 2,700 2,300 1,500 1,100 20,900 Chocolate Other Total ingredients $ Labor Channel manager Other $ 5,900 12, 100 3,800 5,000 Utilities Rent Marketing 900 $ Total bakery cost Revenues 48,600 66,200