Assume that The AM Bakery is preparing a budget for the month ending October 31. Management...

 

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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 10 percent more than in August, and it expects all ingredient costs (e.g., flour, butter, and so on) to be 10 percent higher in October than in August. Management expects "other" labor costs to be 15 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 $5,500 in August to $6,100 in October. Rent, utilities, and marketing costs are not expected to change. Required: Prepare a budget for The AM Bakery for October. 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 10 percent more than in August, and it expects all ingredient costs (e.g., flour, butter, and so on) to be 10 percent higher in October than in August. Management expects "other" labor costs to be 15 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 $5,500 in August to $6,100 in October. Rent, utilities, and marketing costs are not expected to change. Required: Prepare a budget for The AM Bakery for October.

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