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 $5,100 in August to $5,660 in October. Rent, utilities, and marketing costs are not expected to change. Required: Prepare a budget for The AM Bakery for October. THE AM BAKERY Bakery Sales Budgeted Costs For the Month Ending October 31 Actual (August) Budgeted (October) Ingredients Flour Butter Oil Fruit Nuts Chocolate $ 4,500 4,100 2,300 1,900 1,500 1,100 Other 700 Total ingredients 16,100 Labor Channel manager $ 5,100 Other 11,300 Utilities 3,000 Rent 4,200 Marketing 500 Total bakery cost 40,200 Revenues 58,200
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 $5,100 in August to $5,660 in October. Rent, utilities, and marketing costs are not expected to change. Required: Prepare a budget for The AM Bakery for October. THE AM BAKERY Bakery Sales Budgeted Costs For the Month Ending October 31 Actual (August) Budgeted (October) Ingredients Flour Butter Oil Fruit Nuts Chocolate $ 4,500 4,100 2,300 1,900 1,500 1,100 Other 700 Total ingredients 16,100 Labor Channel manager $ 5,100 Other 11,300 Utilities 3,000 Rent 4,200 Marketing 500 Total bakery cost 40,200 Revenues 58,200
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
None
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education