Question

answer a series of questions about the following scenario:
woof woof bakery is a small business that makes and sells organic dog treats. the owner, lisa, has created a budget and income statement for july to analyze her businesss performance and make future decisions. she has noticed some differences between the budget and the actual results and wants to understand the reasons behind them. she asks you, her bookkeeper, to help with statement analysis and budget variance reporting. you review the documents and answer her questions.
question 3 of 3: which of the following statements is true about the cost of goods sold in july?
directions: select and review the accounts image. select the best option, then select submit.

○ the cost of goods sold was higher than the budget by $144.
○ the cost of goods sold was lower than the budget by $144.
○ the cost of goods sold was equal to the budget.
○ the cost of goods sold was not affected by the budget.

select the image to zoom (chart of budget for july and income statement for july)
submit button

Explanation:

To determine the correct statement about the cost of goods sold (COGS) in July, we compare the budgeted COGS and the actual COGS from the provided tables. From the "Budget for July" and "Income Statement for July" sections, the budgeted COGS is $12,640 and the actual COGS is $12,496. To find the difference, we calculate \( 12,640 - 12,496 = 144 \). This means the actual COGS is $144 lower than the budgeted amount.

Answer:

The cost of goods sold was lower than the budget by $144.