Management expects rev and so on) to be 10 percent higher in October than in August. Management expects "other" labor costs to be 15 percent higher in October than in August, partly because more labor will be required in October and partly because employees will receive a pay rais The manager will receive a pay raise that will increase his salary from $6,400 in August to $7,090 in October. Rent, utilities, and marketing costs are not expected to change. Required: Prepare a budget for The AM Bakery for October.
Management expects rev and so on) to be 10 percent higher in October than in August. Management expects "other" labor costs to be 15 percent higher in October than in August, partly because more labor will be required in October and partly because employees will receive a pay rais The manager will receive a pay raise that will increase his salary from $6,400 in August to $7,090 in October. Rent, utilities, and marketing costs are not expected to change. Required: Prepare a budget for The AM Bakery for October.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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 10 percent more than in August, and it expects all ingredient costs (e.g., flour, butter,
and so on) to be 10 percent higher in October than in August. Management expects "other" labor costs to be 15 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 $6,400 in August to $7,090 in October. Rent, utilities, and
marketing costs are not expected to change.
Required:
Prepare a budget for The AM Bakery for October.
Transcribed Image Text:wi
Ingredients
Flour
Butter
Oil
Fruit
Nuts
Chocolate
Other
Total ingredients
Labor
For the Month Ending October 31
Actual
(August)
Channel manager
Other
Utilities
Rent
THE AM BAKERY
Bakery Sales
Budgeted Costs
Marketing
Total bakery cost
Revenues
$
LA
$
$
LA
$
$
Budgeted
(October)
5,800
5,400
3,600
3,200
2,800
1,750
1,350
23,900 $
6,400
12,600
4,300
5,500
1,150
53,850 $
71,200
0
0
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