Exercise 8-15 Flexible Budgets and Revenue and Spending Variances [LO1, LO2]

Gelato Supremo 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 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

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.

Required:

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).)

Gelato Supremo Revenue and Spending Variances For the Month Ended July 31
	Flexible Budget	Actual Results	Revenue and Spending Variances
Revenue	$	$	$	(Click to select) U F None
Expenses:
Raw materials				(Click to select) F U None
Wages				(Click to select) U F None
Utilities				(Click to select) F U None
Rent				(Click to select) U F None
Insurance				(Click to select) F U None
Miscellaneous				(Click to select) None U F
Total expense				(Click to select) U F None
Net operating income	$	$	$	(Click to select) None F U