Assume that The AM Bakery is preparing a budget for the month ending December 31. Management prepares the budget for the month ending December 31 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 December. Ingredients Flour Butter Oil Fruit Nuts Chocolate Other Total ingredients Labor Channel manager Other Utilities Rent Marketing Total bakery costs Revenues Ingredients Flour Butter Oil Fruit Nuts Chocolate Other THE AM BAKERY Bakery Sales Actual Costs THE AM BAKERY Bakery Sales Actual Costs For the Month Ending August 31 Actual For the Month Ending December 31 Total ingredients Labor Channel manager Other Utilities Rent $ 4,000 3,600 1,800 1,400 925 825 425 $ 12,975 Marketing Total bakery costs. Revenues $ 4,600 10,850 2,500 3,650 225 $ 34,800 $ 57,200 Management expects revenue to be 100 percent greater in December than in August because of the holiday season. Management expects that all food costs (e.g., flour, butter, and so on) will be 120 percent higher in December than in August because of the increase in sales and because prices for ingredients are generally higher in the high-demand holiday months. Management expects "other" labor costs to be 130 percent higher in December than in August, partly because more labor will be required in December and partly because employees will get a pay raise. The manager will get a pay raise that will increase his salary from $4,600 in August to $5,100 in December. Utilities will be 15 percent higher in December than in August. Rent and marketing will be the same in December as in August. Now, move ahead to January of the following year and assume the following actual results occurred in December. Actual $ 8,680 7,895 4,025 3,400 2,275 1,625 860 $ 28,760 $ 5,100 24,725 Budgeted 3,375 3,625 240 $ 65,825 $ 113,100 $ 3,790 3,490 1,910 1,090 810 825 310 $ 12,225 4,600 11,060 2,390 3,650 110 $ 34,035 $ 57,200 Difference $ 210 110 (110) 310 115 115 $ 750 (210) 110 115 $ 765 Required: a. Prepare a statement that compares the budgeted and actual costs. b. Suppose that you have limited time to determine why actual costs are not the same as budgeted costs. Which three cost items