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 per Month			Variable Element per Liter			Actual Total for June
Revenue				$	13.00		$	72,540
Raw materials				$	4.75		$	30,330
Wages	$	5,700		$	1.50		$	14,560
Utilities	$	1,730		$	0.30		$	3,800
Rent	$	2,700					$	2,700
Insurance	$	1,450					$	1,450
Miscellaneous	$	660		$	0.45		$	2,990

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 $5,700 plus $1.50 per liter of gelato sold and the actual wages for June were $14,560. Via Gelato expected to sell 6,000 liters in June, but actually sold 6,200 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 is a popular neighborhood gelato shop. The company has provided the following cost formulas and actual results for the month of June:

	Fixed Element per Month			Variable Element per Liter			Actual Total for June
Revenue				$	13.00		$	72,540
Raw materials				$	4.75		$	30,330
Wages	$	5,700		$	1.50		$	14,560
Utilities	$	1,730		$	0.30		$	3,800
Rent	$	2,700					$	2,700
Insurance	$	1,450					$	1,450
Miscellaneous	$	660		$	0.45		$	2,990

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 $5,700 plus $1.50 per liter of gelato sold and the actual wages for June were $14,560. Via Gelato expected to sell 6,000 liters in June, but actually sold 6,200 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.)

Answer 1

Revenue spending variance

	Flexible budget	Actual	revenue and spending variance
Actual sold	6200	6200
Revenue	80600	72540	8060 U
expense
Raw materials	29450	30330	880 U
Wages	15000	14560	440 F
Utilities	3590	3800	210 U
Rent	2700	2700	0 None
Insurance	1450	1450	0 None
Miscellaneous	3450	2990	460 F
Total expense	55640	55830	190 U
Net operating income	24960	16710	8250 U