Flexible Budgets and Revenue and Spending Variances [LO1, LO2]
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Gelato Supremo is a popular neighborhood gelato shop. The company has provided the following data concerning its operations:
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|
Fixed
Element
per Month |
Variable
Element
per Liter |
Actual
Total for
July |
| Revenue |
|
|
$ |
14.20 |
$ |
78,520 |
| Raw materials |
|
|
$ |
4.50 |
$ |
25,760 |
| Wages |
$ |
4,700 |
$ |
1.10 |
$ |
11,060 |
| Utilities |
$ |
1,810 |
$ |
0.10 |
$ |
2,215 |
| Rent |
$ |
3,120 |
|
|
$ |
3,120 |
| Insurance |
$ |
1,820 |
|
|
$ |
1,820 |
| Miscellaneous |
$ |
510 |
$ |
0.10 |
$ |
1,156 |
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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 $4,700 plus $1.10 per liter of gelato sold, and the actual wages for July were $11,060. Gelato Supremo expected to sell 5,400 liters in July, but actually sold 5,300 liters.
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| Required: |
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Prepare a report showing Gelato Supremo revenue and spending variances for July. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
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