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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 Ingredients Flour Butter Oil Fruit Nuts Other Actual $ 3,968 3,568 1,904 1,504 968 Chocolate Total ingredients Channel manager 1,140. 740 $ 13,792 $ 5,350 Labor Other Utilities Rent Marketing Total bakery costs Revenues 10,870 2,740 3,940 200 $ 36,892 53,050 Management expects revenue in November to be 30 percent higher than in August, and it expects all ingredient costs (e.g., flour, butter, and so on) to be 25 percent higher in November than In August. Management expects "other" labor costs to be 30 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 $5,350 in August to $5,850 In November. Rent, utilities, and marketing costs are not expected to change. Now, fast forward to early December and assume the following actual results occurred in November: Required: a. Prepare a statement that compares the budgeted and actual costs for November. (Negative amounts should be indicated by a minus sign.) THE AM BAKERY Bakery sales Actual and Budgeted Costs For the Month Ending November 30 Actual Budgeted Difference Ingredients Flour $ 5,120 Butter 4,770 Oil 2,200 Fruit 1,720 Nuts 1,370 Chocolate 1,540 Other 800 Total ingredients $ 17,520 $ 0 Labor Channel manager $ 5,850 Other 14,426 Utilities Rent 2,740 3,940 Marketing 200 Total bakery costs Revenues $ 44,676 69,275 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? Butter, other labor and oll O Flour, nuts, and butter Nuts, flour, and utilities

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