Milano Plzza is a small neighborhood pizzeria that has a small area for in-store
ID: 2397601 • Letter: M
Question
Milano Plzza is a small neighborhood pizzeria that has a small area for in-store dining as well as offering take-out and free home delivery services. The pizzeria's owner has determined that the shop has two major cost drivers-the number of pizzas sold and the number of deliveries made. The pizzeria's cost formulas appear below: Fixed Cost Cost per Cost per Pizza ingredients Kitchen staff veilities Delivery person Delivery vehicle Equipment depreeiation 584 Rent $ 4.50 $6,370 840 0.60 $3.40 $1.50 860 $2,330 960 0.10 In November, the pizzeria budgeted for 2,250 pizzas at an average selling price of $22 per pizza and for 210 déliveries. Data concerning the pizzeria's actual results in November appear below: Results 2,350 190 Deliveries s 52,480 s 11,350 $ 6,31 Delivery person Delivery vehicle Equipment depreciation 1,000 S 646 s 1,032 584Explanation / Answer
Answer 1. Milano Pizza Flexible Budget Performance Report For the Month Ended Nov 30 Actual Results Revenue & Spending Variances Flexible Budget Activity Variances Planning Budget Pizzas Sold 2,350 2,350 2,250 No. Of Deliveries 190 190 210 Revenue - Sales revenue 52,480 780 F 51,700 2,200 F 49,500 Less: Expenses: Pizza Ingredients 11,350 775 U 10,575 450 U 10,125 Kitchen Staff 6,310 (60) U 6,370 - U 6,370 Utilities 1,000 (1,250) U 2,250 60 U 2,190 Delivery Person 646 - 646 68 F 714 Delivery Vehicle 1,032 113 F 1,145 30 F 1,175 Equipment Depreciation 584 - 584 - 584 Rent 2,330 - 2,330 - 2,330 Miscellaneous 928 267 F 1,195 10 U 1,185 Total Expenses 24,180 (915) U 25,095 422 U 24,673 Opearting Income 28,300 1,695 F 26,605 1,778 F 24,827