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 Fixed Variable Actual Element Element Total for per Month per Liter June Revenue Raw materials Wages Utilities Rent Insurance Miscellaneous $17.00 $99,540 $5.15 $32,730 $6,100 1.90 $17,900 $2,130 0.70 $ 7,000 $ 3,100 $1,850 $ 700 0.85 5,800 $3,100 $1,850 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 $6,100 plus $1.90 per liter of gelato sold and the actual wages for June were $17,900. 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).) 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

Ans. Via Gelato Revenue and Spending Variances For the Month Ended June 30 Variance Fav./Unf. Revenue 7560 U Expenses: Raw materials 285 U Wages 170 F Utilities 460 U Rent no effect Insurance no effect Miscellaneous 255 F Total expenses 320 U Net operating income 7880 U *Revenue and spending variance = Flexible budget - Actual results *Working notes: Flexible budget Actual results Difference Revenue 107100 99540 7560 Expenses: 0 Raw materials 32445 32730 -285 Wages 18070 17900 170 Utilities 6540 7000 -460 Rent 3100 3100 0 Insurance 1850 1850 0 Miscellaneous 6055 5800 255 Total expenses 68060 68380 -320 Net operating income 39040 31160 7880 *Calculation of flexible budget: Flexible budget Revenue 6300*17 Expenses: Raw materials 6300*5.15 Wages 6100+(6300*1.90) Utilities 2130+(6300*0.70) Rent 3100 Insurance 1850 Miscellaneous 700+(6300*0.85) *Increase in Sales & Net operating income = Favorable *Decrease in Sales & Net operating income = Unfavorable *Increase in Costs/expenses = Unfavorable *Decrease in Costs/expenses = Favorable

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