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 Actual Total per Liter 29.00 S 6.35 3.10 s 1.90 for June 175,540 40,630 $ Revenue Raw materials 7,300 $ 3,330 4,300 3,050 Wages Utilities 26,400 16,100 4,300 3,050 12,990 Rent Insurance $ 2.05 Miscellaneous 820 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 $7,300 plus $3.10 per liter of gelato sold and the actual wages for June were $26,400. Via Gelato expected to sell 6,100 liters in June, but actually sold 6,300 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., 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

Answer 1

Solution

Via Gelato
Revenues and Spending Variance
For the Month ended June
Revenue	$ 7,160.00	U
Expenses:
Raw material	$ 625.00	U
Wages	$ 430.00	F
Utilities	$ 800.00	U
Rent	$ 0.00	None
Insurance	$ 0.00	None
Miscellaneous	$ 745.00	F
Total Expenses	$ 250.00	U
Net Operating Income	$ 7,410.00	U

Working

Standard revenue and cost
	D=(A x C) +B	A	B	C
Revenue	$ 182,700	6300		$    29.00
Expenses:		6300
Raw material	$ 40,005	6300		$       6.35
Wages	$ 26,830	6300	$      7,300.00	$       3.10
Utilities	$ 15,300	6300	$      3,330.00	$       1.90
Rent	$ 4,300	6300	$      4,300.00	$           -
Insurance	$ 3,050	6300	$      3,050.00	$           -
Miscellaneous	$ 13,735	6300	$         820.00	$       2.05
Total Expenses	$ 103,220
Net Operating Income	$ 79,480