Via Gelato is a popular neighborhood gelato shop. The company has provided the f

Question

Via Gelato is a popular neighborhood gelato shop. The company has provided the following cost formulas and actual results for the month of June:

While gelato is sold by the cone or cup, the shop measures its activity in terms of the total number of liters of gelato sold. For example, wages should be $7,400 plus $3.20 per liter of gelato sold and the actual wages for June were $28,400. Via Gelato expected to sell 6,400 liters in June, but actually sold 6,600 liters.

Fixed Element
per Month Variable Element
per Liter Actual Total
for June Revenue $ 30.00 $ 190,540 Raw materials $ 6.45 $ 42,930 Wages $ 7,400 $ 3.20 $ 28,400 Utilities $ 3,430 $ 2.00 $ 17,300 Rent $ 4,400 $ 4,400 Insurance $ 3,150 $ 3,150 Miscellaneous $ 830 $ 2.15 $ 14,390

Explanation / Answer

Actual Flexible budget Revenue and spending variances Revenue 190540 198000 7460 U Expenses: Raw materials 42930 42570 360 U Wages 28400 28520 120 F Utilities 17300 16630 670 U Rent 4400 4400 0 None Insurance 3150 3150 0 None Miscellaneous 14390 15020 630 F Total expenses 110570 110290 280 U Net operating income 79970 87710 7740 U

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