Refer to Exhibit 1.5, which shows budgeted versus actual costs. Assume that Carmen’s Cookies is preparing a budget for the month ending June 30.

Management prepares the budget by starting with the actual results for April 30 that appear in Exhibit 1.5. Next, management considers what the differences in costs will be between April and June.

Management expects cookie sales to be 10 percent greater in June than in April, and it expects all food costs (e.g., flour, eggs) to be 10 percent higher in June than in April. Management expects

“other” labor costs to be 15 percent higher in June than in April, partly because more labor will be required in June and partly because employees will get a pay raise. The manager will get a pay raise that will increase the salary from $3,000 in April to $3,500 in June. Rent and utilities are not expected to change.

Required Prepare a budget for Carmen’s Cookies for June.

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1234 A B CARMEN'S COOKIES Retail Responsibility Center Budgeted versus Actual Costs For the Month Ending April 30 D E F 569825 Actual Budget Difference 7 6 Food Flour $ 2,100 $ 2,200 $ (100) Eggs 5,200 4,700 500 Chocolate 2,000 1,900 100 10 Nuts 2,000 1,900 100 11 Other 2,200 2,200 -0- 12 Total food $13,500 $ 12,900 $ 600 13 Labor 14 Manager 3,000 3,000 -0- 15 Other 1,500 1,500 -0- 16 Total labor $ 4,500 $ 4,500 $ -0- 17 Utilities 1.800 18 Rent 5,000 19 Total cookie costs $24,800 $24,200 20 Number of cookies sold 32,000 1.800 5,000 32,000 -0- $ 600 ---0-- -0- 21 Exhibit 1.5 Budget versus Actual Data