Via Gelato is a popular neighborhood gelato shop. The company has provided the f
ID: 2476063 • Letter: V
Question
Via Gelato is a popular neighborhood gelato shop. The company has provided the following data concerning its operations:
Fixed
Variable
Actual
Element
Element
Total for
per Month
per Liter
June
Revenue
$25.00
$151,540
Raw materials
$ 5.95
$ 39,030
Wages
$ 6,900
$ 2.70
$ 23,500
Utilities
$ 2,930
$ 1.50
$ 13,000
Rent
$ 3,900
$ 3,900
Insurance
$ 2,650
$ 2,650
Miscellaneous
$ 780
$ 1.65
$ 10,890
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 $6,900 plus $2.70 per liter of gelato sold and the actual wages for June were $23,500. Via Gelato expected to sell 6,200 liters in June, but actually sold 6,400 liters.
Required:
Complete the report showing Via Gelato revenue and spending variances for June. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
Fixed
Variable
Actual
Element
Element
Total for
per Month
per Liter
June
Revenue
$25.00
$151,540
Raw materials
$ 5.95
$ 39,030
Wages
$ 6,900
$ 2.70
$ 23,500
Utilities
$ 2,930
$ 1.50
$ 13,000
Rent
$ 3,900
$ 3,900
Insurance
$ 2,650
$ 2,650
Miscellaneous
$ 780
$ 1.65
$ 10,890
Explanation / Answer
All VAriances have been calculated as difference of budget and actual values. If actual expense is more then budgetd then it will show unfavourable variance and vice versa
IN case of revenue if actual sale is less then budgetd then it is denoted as unfavourable variance
Fixed element Variable element Budget at 6400 units Actual Cost Variance per month per litre Revenue 25 160000 151540 8460 Unfavourable Raw Material 5.95 38080 39030 950 Unfavourable Wages 6900 2.7 24180 23500 680 Favourable Utilities 2930 1.5 12530 13000 470 Unfavourable Rent 3900 3900 3900 0 None Insurance 2650 2650 2650 0 None Miscellaneous 780 1.65 11340 10890 450 Favourable Total Cost 17160 11.8 92680 92970 290 Unfavourable Net Income 67320 58570 8750 UnfavourableRelated Questions
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