Problem $1-49($Static$)$ 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 are shown below. Then, management considers what the differences in costs will be between August and November.

THE AM BAKERY

Bakery Sales

Actual Costs

For the Month Ending August $31$

Actual Budgeted Difference

Ingredients

Flour $ $3,900$ $ $3,700$ $ $200$

Butter $3,5003,400100$

Oil $1,7001,800(100)$

Fruit $1,3001,000300$

Nuts $900800100$

Chocolate $800800-$

Other $400300100$

Total ingredients $ $12,500$ $ $11,800$ $ $700$

Labor

Channel manager $ $4,5004500-$

Other $10,70010,900(200)$

Utilities $2,4002,300100$

Rent $3,6003,600-$

Marketing $200100100$

Total bakery costs $ $33,900$ $ $33,200$ $ $700$

Revenues $ $52,200$ $ $52,200-$

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 $$4,500$ in August to $$5,000$ 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.

THE AM BAKERY

Bakery Sales

Actual Costs

For the Month Ending November $30$

Actual

Ingredients

Flour $ $4,950$

Butter $4,600$

Oil $2,030$

Fruit $1,550$

Nuts $1,200$

Chocolate $1,030$

Other $460$

Total ingredients $ $15,820$

Labor

Channel manager $ $5,000$

Other $14,120$

Utilities $2,400$

Rent $3,600$

Marketing $200$

Total bakery costs $ $41,140$

Revenues $ $68,000$

Required:

Prepare a statement that compares the budgeted and actual costs for November.

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?a$.$ Prepare a statement that compares the budgeted and actual costs for November.

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?

Complete this question by entering your answers in the tabs below.

Prepare a statement that compares the budgeted and actual costs for November.

Note: Negative amounts should be indicated by a minus sign.

$\backslash$table$[[$THE AM BAKERY$],[$Bakery Sales$],[$Actual and Budgeted Costs$],[$For the Month Ending November $30],[,$Actual,Budgeted,Difference$],[$Ingredients$],[$Flour$,$$$,4,950,$$$,6,188,$$$,1,238],[$Butter$,,4,600,,5,750,,1,150],[$Oil$,,2,030,,2,538,,508],[$Fruit$,,1,550,,1,938,,388],[$Nuts$,,1,200,,1,500,,300],[$Chocolate$,,1,030,,1,288,,258],[$Other$,,460,,575,,115],[$Total ingredients,$$,15,820,$$$,19,777,$$$,3,320],[$Labor$],[$Channel manager,$$,5,000,$$$,6,500,$$$,1,500],[$Other$,,14,120,,17,650,,3,530],[$Utilities$,,2,400,,2,400,,0],[$Rent$,,3,600,$$$,3,600,,0],[$Marketing$,,200,,200,,0],[$Total bakery costs,$$,41,140,$$$,30,350,$$$,5,030],[$Revenues$,$$$,68,000,$$$,50,127,$$$,8,350]]$