Question

Via Gelato is a popular neighborhood gelato shop. The company has provided the following data concerning its operations:

	Fixed Element per Month		Variable Element per Liter		Actual Total for June
Revenue			$	32.00	$	192,540
Raw materials			$	6.65	$	41,930
Wages	$	7,600	$	3.40	$	28,100
Utilities	$	3,630	$	2.20	$	17,500
Rent	$	4,600			$	4,600
Insurance	$	3,350			$	3,350
Miscellaneous	$	850	$	2.35	$	15,190

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 $7,600 plus $3.40 per liter of gelato sold and the actual wages for June were $28,100. Via Gelato expected to sell 6,000 liters in June, but actually sold 6,200 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).)

Answer 1

• All working forms part of the answer
• Answer for Spending Variances

	Fixed Cost (A)	Variable cost per litre (B)	Total Variable cost for 6200 litres (C=6200 x B)	Total cost for 6200 litres [Flexible Budget] (D=A+C)	Actual cost for 6200 litres (E)	Spending Variance
Raw materials		$                     6.65	$         41,230.00	$        41,230.00	$          41,930.00	700	Unfavourable
Wages	$        7,600.00	$                     3.40	$         21,080.00	$        28,680.00	$          28,100.00	580	Favourable
Utilities	$        3,630.00	$                     2.20	$         13,640.00	$        17,270.00	$          17,500.00	230	Unfavourable
Rent	$        4,600.00		$                         -	$          4,600.00	$             4,600.00	0	None
Insurance	$        3,350.00		$                         -	$          3,350.00	$             3,350.00	0	None
Miscellaneous	$            850.00	$                     2.35	$         14,570.00	$        15,420.00	$          15,190.00	230	Favourable

• Answer for Revenue Variance

Budgeted Revenue for 6200 litres	Actual Revenue	Revenue Variance
$198,400 [6200 x $32]	$192,540	5860 Unfavourable