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				$	23.00		$	140,540
Raw materials				$	5.75		$	37,030
Wages	$	6,700		$	2.50		$	21,800
Utilities	$	2,730		$	1.30		$	11,600
Rent	$	3,700					$	3,700
Insurance	$	2,450					$	2,450
Miscellaneous	$	760		$	1.45		$	9,390

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:

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

					Flexible
			Fixed	Variable	budget
			component	component
no of jobs					6,300
	Revenue			23	144900
	Raw materials			5.75	36,225
	Wages		6,700	2.5	22450
	utilities		2,730	1.3	10920
	rent		3,700		3,700
	insurance		2,450		2,450
	miscellanoeus expense		760	1.45	9895
	total expense		16340	11.00	85,640
				Actual	Revenue & spending		Flexible
				budget	variance		budget
				6,300			6,300
		Revenue		140,540	4,360	U	144900
	less:Exoenses
	Raw materials			37,030	805	U	36,225
	Wages			21,800	650	F	22450
	utilities			11,600	680	U	10920
	rent			3,700	0	U	3,700
	insurance			2,450	0	N	2,450
	miscellanoeus expense			9,390	505	F	9895
	total expense			85,970	330	U	85,640
	Net operating income			54,570	4,690	U	59,260