Exercise $1-34($Static$)$ Cost Data for Managerial Purposes$-$Budgeting $($LO $1-3)$

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 $20$ percent more than in August, and it expects all ingredient costs $($e$.$g$.,$ flour, butter, and so on$)$ to be $20$ percent higher in October than in August. Management expects "other" labor costs to be $25$ 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 $$4,500$ in August to $$5,000$ in October. Rent, utilities, and marketing costs are not expected to change.

Required:

Prepare a budget for The AM Bakery for October.

$\backslash$table$[[$THE AM BAKERY$],[$Bakery Sales$],[$For the Montheted Costs$],[,\backslash$table$[[$Actual$],[($August$)]],\backslash$table$[[$Budgeter$],[($October$)]]],[$Ingredients$,,],[$Flour$,$$$3,900,],[$Butter$,3,500,],[$Oil$,1,700,],[$Fruit$,1,300,],[$Nuts$,900,],[$Chocolate$,800,],[$Other$,400,],[$Total ingredients,$$12,500,$$