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: Fixed Element Variable Element Actual Total per Liter $24.00 $5.85 $ 2.60 $ 1.40 for June $150,540 $ 38,930 $ 23,700 $ 12,400 $ 3,800 $ 2,550 10,790 per Month Revenue Raw materials Wages Utilities Rent Insurance Miscellaneous 6,800 $ 2,830 3,800 $ 2,550 $ 770 $ 1.55 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 $6,800 plus $2.60 per liter of gelato sold and the actual wages for June were $23,700. Via Gelato expected to sell 6,400 liters in June, but actually sold 6,600 liters Required: Calculate Via Gelato revenue and spending variances for June. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Via Gelato Revenue and Spending Variances For the Month Ended June 30 Revenue Expenses Raw materials Wages Utilities Rent Insurance Miscellaneous Total expense Net operating income

Explanation / Answer

Actual Revenue and spending variances Flexible budget Revenue 150540 7860 U 158400 Expenses: Raw materials 38930 320 U 38610 Wages 23700 260 F 23960 Utilities 12400 330 U 12070 Rent 3800 0 None 3800 Insurance 2550 0 None 2550 Miscellaneous 10790 210 F 11000 Total expenses 92170 180 U 91990 Net operating income 58370 8040 U 66410

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