hoo ONE- CHAPTER ONE HOMEWORK Problem 1-48 (Algo) Cost Data for Managerial Purposes-Budgeting (LO 1-3) Assume that The AM Bakery is preparing a budget for the month ending November 30. Management prepares the budget by starting with the actual results for August that is shown below. Then, management considers what the differences in costs will be between August and November. THE AM BAKERY Bakery sales Actual and Budgeted Costs For the Month Ending August 31 Actual Ingredients Flour $ 3,952 3,552 1,856 Butter oil Fruit 1,456 952 Nuts Chocolate 1,060 Other 660 Total ingredients $13,488 Labor $ 5,150 10,830 2,660 3,860 200 Channel manager Other si Utilities Rent Marketing Total bakery costs 36,188 52,850 Revenues Management expects revenue in November to be 30 percent higher than in August, and it expects all ingredient costs (e.g., flour, butter, and so on) to be 25 percent higher in November than in August. Management expects "other" labor costs to be 30 percent higher in November than in August, partly because more labor will be required in November and partly because employees will get a pay raise. The manager will get a pay raise that will increase his salary from $5,150 in August to $5,650 in November. Rent, utilities, and marketing costs are not expected to change. Now, fast forward to early December and assume the following actual results occurred in November: CHAPTER ONE HOMEWORK DULter, ana so ony to De 2 percent igner in Novemver nan in August, Management expecis ouner saoor costs higher in November than in August, partly because more labor will be required in November and partly because e pay raise. The manager will get a pay raise that will increase his salary from $5,150 in August to $5,650 in Novem and marketing costs are not expected to change. Now, fast forward to early December and assume the following actual results occurred in November: Required: a. Prepare a statement that compares the budgeted and actual costs for November. (Negative amounts should b minus sign.) THE AM BAKERY Bakery sales Actual and Budgeted Costs For the Month Ending November 30 Budgeted Difference Actual Ingredients 5,080 Flour 4,730 Butter 2,160 Oil 1,680 Fruit 1,330 Nuts Chocolate 1,420 720 Other 17,120 Total ingredients Labor 5,650 Channel manager 14,354 Other 2,660 Utilities Rent 3,860 Marketing Total bakery costs 330 43,974 68,975 Revenues b. Suppose that you have limited time to determine why actual costs are not the same as budgeted costs. Which would you investigate to see why actual and budgeted costs are different? Flour, nuts, and butter O Nuts, flour, and utilities Butter, other labor and oil