ssume that The AM Bakery is preparing a budget for the month ending November 30. Management prepares the budget by starting ith the actual results for August that are shown below. Then, management considers what the differences in costs will be between ugust and November. Ingredients Flour Butter 011 Fruit Nuts THE AM BAKERY Bakery Sales Actual Costs For the Month Ending August 31 Actual Chocolate Other Total ingredients Labor Channel manager Other Utilities Rent Marketing Total bakery costs Revenues $4,180 3,780 1,980 1,440 956 856 456 $ 13,648 $4,640 10,980 2,610 3,810 270 Budgeted $ 3,924 3,596 2,136 1,126 912 856 314 $12,864 4,640 11,600 2,454 3,810 156 $ 35,958 $ 35,524 $ 59,200 $ 59,200 Difference $ 256 184 (156) 314 44 142 $784 (620) 156 114 $ 434 A Management expects revenue in November to be (expression error) percent higher than in August, and it expects all ingredient costs (e.g., flour, butter, and so on) to be (expression error) percent higher in November than in August. Management expects "other" labor costs to be (expression error) 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 $4,640 in August to
ssume that The AM Bakery is preparing a budget for the month ending November 30. Management prepares the budget by starting ith the actual results for August that are shown below. Then, management considers what the differences in costs will be between ugust and November. Ingredients Flour Butter 011 Fruit Nuts THE AM BAKERY Bakery Sales Actual Costs For the Month Ending August 31 Actual Chocolate Other Total ingredients Labor Channel manager Other Utilities Rent Marketing Total bakery costs Revenues $4,180 3,780 1,980 1,440 956 856 456 $ 13,648 $4,640 10,980 2,610 3,810 270 Budgeted $ 3,924 3,596 2,136 1,126 912 856 314 $12,864 4,640 11,600 2,454 3,810 156 $ 35,958 $ 35,524 $ 59,200 $ 59,200 Difference $ 256 184 (156) 314 44 142 $784 (620) 156 114 $ 434 A Management expects revenue in November to be (expression error) percent higher than in August, and it expects all ingredient costs (e.g., flour, butter, and so on) to be (expression error) percent higher in November than in August. Management expects "other" labor costs to be (expression error) 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 $4,640 in August to
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter10: Evaluating Decentralized Operations
Section: Chapter Questions
Problem 1PB
Related questions
Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
please answer both part in detail
Transcribed Image Text: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.
Ingredients
Flour
Butter
011
Fruit
Nuts
THE AM BAKERY
Bakery Sales
Actual Costs
For the Month Ending August 31
Actual
Chocolate
Other
Total ingredients
Labor
Channel manager
Other
Utilities
Rent
Marketing
Total bakery costs.
Revenues
$4,180
3,780
1,980
1,440
956
856
456
$ 13,648
$4,640
10,980
Budgeted
$ 3,924
3,596
2,136
1,126
912
856
314
$12,864
4,640
11,600
2,454
3,810
156
2,610
3,810
270
$ 35,958
$35,524
$ 59,200 $ 59,200
Difference
$ 256
184
(156)
314
44
142
$784
(620)
156
114
$ 434
Management expects revenue in November to be (expression error) percent higher than in August, and it expects all ingredient costs
(e.g., flour, butter, and so on) to be (expression error) percent higher in November than in August. Management expects "other" labor
costs to be (expression error) 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 $4,640 in August to
$5,140 in November. Rent, utilities, and marketing costs are not expected to change.
Transcribed Image Text: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
Butter
Oil
Fruit
Nuts
Chocolate
Other
Total ingredients
Labor
Channel manager
Other
Utilities
Rent
$ 5,370
4,992
2,296
1,690
Required A Required B
1,340
1,170
516
$ 17,374
$5,140
14,512
2,610
3,810
270
Marketing
Total bakery costs
Revenues
Required:
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?
$ 43,716
$77,170
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