Milano Pizza is a small neighborhood pizzeria that has a small area for in-store
ID: 2399768 • Letter: M
Question
Milano Pizza 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 per Month Pizza Delivery Pizza ingredients Kitchen staff Utilities Delivery persorn Delivery vehicle $ 4.10 $6,070 0.10 $ 690 $ 710 $2,030 $2.90 $2.30 Equipment depreciation 464 Rent Miscellaneous $ 810 $ 0.05 In November, the pizzeria budgeted for 1,800 pizzas at an average selling price of $15 per pizza and for 220 deliveries. Data concerning the pizzeria's actual results in November appear below: Actual Pizzas Deliveries Results 1,900 200 Revenue Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous 29,130 $ 8,650 $ 6,010 925 $ 580 $ 1,002 $ 464 $ 2,030 $ 838Explanation / Answer
Answers
---Fixed cost remains same as Budgeted(planning) cost.
---Planning Budget Variable cost changes as per actual level of activities.
Actual Results
Spending Variances
Flexible Budget
Activity Variances
Planning Budget
Pizzas
1,900
1,900
1,800
Deliveries
200
200
220
Revenues
$ 29,130.00
$ 630.00
Favourable
$ 28,500.00
$ 1,500.00
Favourable
$ 27,000.00
Expenses:
Pizza Ingrediants
$ 8,650.00
$ 860.00
Unfavourable
$ 7,790.00
$ 410.00
Unfavourable
$ 7,380.00
kitchen Staff
$ 6,010.00
$ 60.00
Favourable
$ 6,070.00
$ -
None
$ 6,070.00
Utilities
$ 925.00
$ 45.00
Unfavourable
$ 880.00
$ 10.00
Unfavourable
$ 870.00
Delivery Person
$ 580.00
$ -
None
$ 580.00
$ (58.00)
Favourable
$ 638.00
Delivery Vehicle
$ 1,002.00
$ 168.00
Favourable
$ 1,170.00
$ (46.00)
Favourable
$ 1,216.00
Equipment Depreciation
$ 464.00
$ -
None
$ 464.00
$ -
None
$ 464.00
Rent
$ 2,030.00
$ -
None
$ 2,030.00
$ -
None
$ 2,030.00
Miscellaneous
$ 838.00
$ 67.00
Favourable
$ 905.00
$ 5.00
Unfavourable
$ 900.00
Total Expenses
$ 20,499.00
$ 610.00
Unfavourable
$ 19,889.00
$ 321.00
Unfavourable
$ 19,568.00
Net Operating Income
$ 8,631.00
$ 20.00
Favourable
$ 8,611.00
$ 1,179.00
Favourable
$ 7,432.00
Actual Results
Flexible Budget
Planning Budget
Pizzas
1900
1900
1800
Deliveries
200
200
220
Revenues
29130
=1900*15
=1800*15
Expenses:
Pizza Ingrediants
8650
=1900*4.1
=1800*4.1
kitchen Staff
6010
6070
6070
Utilities
925
=690+(1900*0.1)
=690+(1800*0.1)
Delivery Person
580
=2.9*200
=2.9*220
Delivery Vehicle
1002
=710+(2.3*200)
=710+(2.3*220)
Equipment Depreciation
464
464
464
Rent
2030
2030
2030
Miscellaneous
838
=810+(0.05*1900)
=810+(0.05*1800)
Total Expenses
Total Expenses
Total Expenses
Total Expenses
Net Operating Income
Revenues – Total Expenses
Revenues – Total Expenses
Revenues – Total Expenses
Actual Results
Spending Variances
Flexible Budget
Activity Variances
Planning Budget
Pizzas
1,900
1,900
1,800
Deliveries
200
200
220
Revenues
$ 29,130.00
$ 630.00
Favourable
$ 28,500.00
$ 1,500.00
Favourable
$ 27,000.00
Expenses:
Pizza Ingrediants
$ 8,650.00
$ 860.00
Unfavourable
$ 7,790.00
$ 410.00
Unfavourable
$ 7,380.00
kitchen Staff
$ 6,010.00
$ 60.00
Favourable
$ 6,070.00
$ -
None
$ 6,070.00
Utilities
$ 925.00
$ 45.00
Unfavourable
$ 880.00
$ 10.00
Unfavourable
$ 870.00
Delivery Person
$ 580.00
$ -
None
$ 580.00
$ (58.00)
Favourable
$ 638.00
Delivery Vehicle
$ 1,002.00
$ 168.00
Favourable
$ 1,170.00
$ (46.00)
Favourable
$ 1,216.00
Equipment Depreciation
$ 464.00
$ -
None
$ 464.00
$ -
None
$ 464.00
Rent
$ 2,030.00
$ -
None
$ 2,030.00
$ -
None
$ 2,030.00
Miscellaneous
$ 838.00
$ 67.00
Favourable
$ 905.00
$ 5.00
Unfavourable
$ 900.00
Total Expenses
$ 20,499.00
$ 610.00
Unfavourable
$ 19,889.00
$ 321.00
Unfavourable
$ 19,568.00
Net Operating Income
$ 8,631.00
$ 20.00
Favourable
$ 8,611.00
$ 1,179.00
Favourable
$ 7,432.00