Via Gelato is a popular neighborhood gelato shop. The company has provided the following cost formulas and actual results for the month of June: Revenue Raw materials Wages Utilities Rent Insurance Miscellaneous Revenue Expenses: Fixed Element per Month Raw materials $ 6,200 $ 2,230 $ 3,200 1,950 $ 710 $ Via Gelato Revenue and Spending Variances For the Month Ended June 30 Wages Utilities Rent Insurance Miscellaneous Variable Element per Liter $ 18.00 $5.25 $ 2.00 $ 0.80 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 $6,200 plus $2.00 per liter of gelato sold and the actual wages for June were $18,900. Via Gelato expected to sell 6,200 liters in June, but actually sold 6,400 liters. Total expense Net operating income 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.) 0.95 Actual Total for June $ 110,530 $ 33,730 $ 18,900. $ 7,550 $ 3,200 $ 1,950 $ 6,670
Via Gelato is a popular neighborhood gelato shop. The company has provided the following cost formulas and actual results for the month of June: Revenue Raw materials Wages Utilities Rent Insurance Miscellaneous Revenue Expenses: Fixed Element per Month Raw materials $ 6,200 $ 2,230 $ 3,200 1,950 $ 710 $ Via Gelato Revenue and Spending Variances For the Month Ended June 30 Wages Utilities Rent Insurance Miscellaneous Variable Element per Liter $ 18.00 $5.25 $ 2.00 $ 0.80 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 $6,200 plus $2.00 per liter of gelato sold and the actual wages for June were $18,900. Via Gelato expected to sell 6,200 liters in June, but actually sold 6,400 liters. Total expense Net operating income 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.) 0.95 Actual Total for June $ 110,530 $ 33,730 $ 18,900. $ 7,550 $ 3,200 $ 1,950 $ 6,670
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Via Gelato is a popular neighborhood gelato shop. The company has provided the following cost formulas and actual results for the
month of June:
Revenue
Raw materials
Wages
Utilities
Rent
Insurance.
Miscellaneous
Revenue
Expenses:
Fixed
Element
per Month
0.95
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 $6,200 plus $2.00 per liter of gelato sold and the actual wages for June were $18,900. Via Gelato expected to sell
6,200 liters in June, but actually sold 6,400 liters.
Raw materials
$ 6,200
$ 2,230
$ 3,200
$ 1,950
$ 710
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
Revenue and Spending Variances
For the Month Ended June 30
Wages
Utilities
Rent
Insurance
Miscellaneous
Variable
Element per
Liter
$18.00
$5.25
$ 2.00
$0.80
Total expense
Net operating income
Actual
Total for
June
$ 110,530
$33,730
$ 18,900
$ 7,550
$ 3,200
$ 1,950
$ 6,670
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