Exercise 1-31 Cost Data for Managerial Purposes - Budgeting (LO 1-3) Assume that

Question

Exercise 1-31 Cost Data for Managerial Purposes - Budgeting (LO 1-3) Assume that Carmen's Cookies is preparing a budget for the month ending June 30. Management prepares the budget by starting with the actual results for April 30. Next, management considers what the differences in costs will be between April and June. Management expects the number of cookies sold to be 20 percent greater in June than in April, and it expects all food costs (e.g., flour, eggs) to be 20 percent higher in June than in April. Management expects "other" labor costs to be 25 percent higher in June than in April, partly because more labor will be required in June and partly because employees will get a pay raise. The manager will get a pay raise that will increase the salary from $3,900 in April to $4,990 in June. Rent and utilities are not expected to change. Required: Prepare a budget for Carmen's Cookies for June

Explanation / Answer

CARMEN'S COOKIES Retail Responisbility Center Budgeted Costs For the Month Ending June 30 Actual Budget (April) (June) Food Flour 3000 3600 Eggs 6100 7320 Chocolate 2900 3480 Nuts 2900 3480 Other 3100 3720 Total food 18000 21600 Labor Manager 3900 4990 Other 2400 3000 Total labor 6300 7990 Utilities 2700 2700 Rent 5900 5900 Total cookie cost 32900 38190 Number of cookies sold 41000 49200

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