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anzhelika [568]
3 years ago
13

Via Gelato is a popular neighborhood gelato shop. The company has provided the following cost formulas and actual results for th

e month of June:
Fixed Element Variable Element Actual Total
per Month per Liter for June
Revenue $28.00 $171,540
Raw materials $6.25 $40,530
Wages $7,200 $3.00 $26,300
Utilities $3,230 $1.80 $15,000
Rent $4,200 $4,200
Insurance $2,950 $2,950
Miscellaneous $810 $1.95 $12,890
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 $7,200 plus $3.00 per liter of gelato sold and the actual wages for June were $26,300. Via Gelato expected to sell 6,200 liters in June, but actually sold 6,400 liters.
Required:
Calculate Via Gelato revenue and spending variances for June.
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
Business
1 answer:
vlabodo [156]3 years ago
3 0

Answer:

Via Gelato

Revenue and Spending Variances  For the Month Ended June 30 :

                                        Budget         Actual          Variances

Units sold                         6,200          6,400           200 Favorable

Revenue                          $179,200     $171,540       $7,660 Unfavorable

Expenses :

Raw materials                 $40,000      $40,530        $530 Unfavorable

Wages                             $26,400       $26,300       $100 Favorable

Utilities                            $14,750        $15,000        $250 Unfavorable

Rent                                 $4,200         $4,200           $0 Neither

Insurance                        $2,950         $2,950           $0 Neither

Miscellaneous                $13,290       $12,890          $400 Favorable

Total expense                $101,590      $101,870         $280 Unfavorable

Net operating income  $77,610       $69,670         $7,940 Unfavorable

Explanation:

a) Revenue budget = $28 x 6,400 = $179,200

b) Wages budget = $7,200 + $3.00 x 6,400 = $26,400

c) Utilities budget = $3,230 + $1.80 x 6,400 = $14,750

d) Miscellaneous = $810 + $1.95 x 6,400 = $13,290

These flexible budgets were calculated for Via Gelato since it measures its activity in terms of the total number of liters of gelato sold.  To obtain variances, items are compared on like terms.

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