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Creating a budget for Mama Italiano Sauce

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

Solution Preview

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

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.

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