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 data concerning its operations: 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 $6,700 plus $2.50 per liter of gelato sold and the actual wages for June were $21,800. Via Gelato expected to sell 6,100 liters in June, but actually sold 6,300 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).)

Explanation / Answer

Particulars Flexible Budget Actual Results Variance Sales Quantity (q) 6300 6300 Revenue (23*q) 144900 140540 -4360 Unfavorable Raw Materials 5.75*q 36225 37030 -805 Unfavourable Wages 6700+(2.50*q) 22450 21800 650 Favourable Utilities 2730+(1.30*q) 10920 11600 -680 Unfavourable Rent 3700 3700 3700 0 None Insurance 2450 2450 2450 0 None Miscellaneous 760+(1.45*q) 9895 9390 505 Favourable Particulars Revenue & Spending Variances Revenue -4360 Unfavorable Expenses Raw Materials -805 Unfavourable Wages 650 Favourable Utilities -680 Unfavourable Rent 0 Unfavourable Insurance 0 Unfavourable Miscellaneous 505 Favourable Total Expense -330 Unfavourable Net Operating Income -4690 Unfavourable

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