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Creating a budget for Mama Italiano Sauce

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Mama Italiano Sauce is in the process of preparing a production cost budget for May. The actual costs in April were:

Mama Italian Sauce

Production Cost Budget

April 2008

Production - Jars of sauce

20,000

Ingredient cost (variable)

$16,000

Labor cost (variable)

9,000

Rent (fixed)

4,000

Depreciation (fixed)

6,000

Other (fixed)

1,000

Total

$36,000

Using this information, prepare a budget for May stating the total amount for the May budget. Assume the budget will increase to 25,500 jars of sauce reflecting anticipated sales increase related to a new marketing campaign

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Solution Summary

This solution shows how to prepare a budget for a firm that expects its sales to increase next month because of a new marketing campaign.

Solution Preview

To determine the variable costs for May, divide Ingredient Cost and Labor Cost by 20,000 and multiply by ...

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