would you choose those three 1-49. Cost Data for Managerial Purposes-Budgeting (@LO 1-3) Refer to Exhibit 1.5, which shows budgeted versus actual costs. 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 appear in Exhibit 1.5. Then, management considers what the differences in costs will be between August and December. 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 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 1 WN 4 5 6 7 8. 9 10 11 12 13 A B THE AM BAKERY Bakery Sales Actual Costs For the Month Ending December 31 Actual Ingredients Flour $ 8,465 Butter 7,680 Oil 3,800 Fruit 3,125 Nuts 2,200 Chocolate 1,600 Other 850 Total ingredients $ 27.720 14 10 13 850 27,720 $ $ 14 15 16 17 18 19 20 21 Other Total ingredients Labor Channel manager Other Utilities Rent Marketing Total bakery costs 5,000 24,400 3,125 3,600 210 64,055 22 23 Revenues 103,200 Required a. Prepare a statement like the one in Exhibit 1.5 that compares the budgeted and actual costs. 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? Why would you choose those three costs