Question

Exercise 9-16 Flexible Budgets and Revenue and Spending Variances [LO9-1, LO9-3] 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 $ 15.00 $ 4.95 $ 1.70 $ 0.50 for June per Month $ 84,540 $31,530 $ 15,900 $ Revenue Raw materials $5,900 $ 1,930 $ 2,900 $ 1,650 $ Wages Utilities 5,500 $ 2,900 $ Rent 1,650 $ Insurance Miscellaneous $0.65 680 4,150 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 $5,900 plus $1.70 per liter of gelato sold and the actual wages for June were $15,900. Via Gelato expected to sell 6,000 liters in June, but actually sold 6,200 liters.

Answer 1

	Actual	Flexible budget	Revenue and Spending variances
Revenue	84540	93000	8460	U
Expenses:
Raw materials	31530	30690	840	U
Wages	15900	16440	540	F
Utilities	5500	5030	470	U
Rent	2900	2900	0	None
Insurance	1650	1650	0	None
Miscellaneous	4150	4710	560	F
Total expense	61630	61420	210	U
Net operating income	22910	31580	8670	U