Question

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 $ 3,924 Butter 3.524 Oil 1,772 Fruit 1,372 Nuts 924 Chocolate 920 Other 520 Total ingredients $ 12,956 Labor Channel manager $ 4,800 Other 10, 760 utilities 2.520 Rent 3, 720 Marketing 200 Total bakery costs $ 34,956 Revenues 52,500 Management expects revenue in November to be a percent higher than in August, and it expects all ingredient costs (0.9., flour, butter, and so on) to be 25 percent higher in November than in August. Management expects "other" labor costs to be 30 percent

Answer 1

Part (a)

The AM Bakery

Bakery Sales

Budgeted Costs

For the Month Ending November 30

Particulars	Actual (in $)	Budgeted (in $)	Difference (in $) (Budgeted-Actual)
Flour	5010	4905	(105)
Butter	4660	4405	(255)
Oil	2090	2215	125
Fruit	1610	1715	105
Nuts	1260	1155	(105)
Chocolate	1210	1150	(60)
Other	580	.650	70
Total ingredients	16420	16195	(225)
Labor:
Channel manager	5300	4800	(500)
Other	14228	13988	(240)
Utilities	2520	2520	-
Rent	3720	3720	-
Marketing	200	200	-
Total bakery cost	42388	41423	(965)
Revenues	68450	65625	2825

* Negative sign indicated that these costs are more than budgted cost.

Part (b)

We will investigate Flour, nuts and butter tto investigate to see why acutal and budgted cost are not same.

Because these costs are increased. Cost of Oil, and utilities are not increased.