Milano Pizza is a small neighborhood pizzeria that has a small area for in-store
ID: 2399799 • 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 Delivery Pizza 4.10 Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscel1aneous $6,290 $ 800 $ 0.20 $3.00 $2.20 $ 820 $ 552 2,250 $ 920 0.10 In November, the pizzeria budgeted for 2,130 pizzas at an average selling price of $18 per pizza and for 250 deliveries Data concerning the pizzeria's actual results in November appear below Actual Results Pizzas Deliveries 2,230 230 Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscel1aneous 40,8860 $ 10,6360 $ 6,230 $ 9860 $690 $ 1,024 $ 552 $2,258 $ 904Explanation / 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
2,230
2,230
2,130
Deliveries
230
230
250
Revenues
$ 40,880.00
$ 740.00
Favourable
$ 40,140.00
$ 1,800.00
Favourable
$ 38,340.00
Expenses:
Pizza Ingrediants
$ 10,630.00
$ 1,487.00
Unfavourable
$ 9,143.00
$ 410.00
Unfavourable
$ 8,733.00
kitchen Staff
$ 6,230.00
$ 60.00
Favourable
$ 6,290.00
$ -
None
$ 6,290.00
Utilities
$ 980.00
$ 266.00
Favourable
$ 1,246.00
$ 20.00
Unfavourable
$ 1,226.00
Delivery Person
$ 690.00
$ -
None
$ 690.00
$ 60.00
Favourable
$ 750.00
Delivery Vehicle
$ 1,024.00
$ 302.00
Favourable
$ 1,326.00
$ 44.00
Favourable
$ 1,370.00
Equipment Depreciation
$ 552.00
$ -
None
$ 552.00
$ -
None
$ 552.00
Rent
$ 2,250.00
$ -
None
$ 2,250.00
$ -
None
$ 2,250.00
Miscellaneous
$ 904.00
$ 239.00
Favourable
$ 1,143.00
$ 10.00
Unfavourable
$ 1,133.00
Total Expenses
$ 23,260.00
$ 620.00
Unfavourable
$ 22,640.00
$ 336.00
Unfavourable
$ 22,304.00
Net Operating Income
$ 17,620.00
$ 120.00
Favourable
$ 17,500.00
$ 1,464.00
Favourable
$ 16,036.00
Actual Results
Flexible Budget
Planning Budget
Pizzas
2230
2230
2130
Deliveries
230
230
250
Revenues
40880
=2230*18
=2130*18
Expenses:
Pizza Ingrediants
10630
=2230*4.1
=2130*4.1
kitchen Staff
6230
6290
6290
Utilities
980
=800+(2230*0.2)
=800+(2130*0.2)
Delivery Person
690
=3*230
=3*250
Delivery Vehicle
1024
=820+(2.2*230)
=820+(2.2*250)
Equipment Depreciation
552
552
552
Rent
2250
2250
2250
Miscellaneous
904
=920+(0.1*2230)
=920+(0.1*2130)
Total Expenses
Total Expenses
Total Expenses
Total Expenses
Net Operating Income
Net Operating Income
Net Operating Income
Net Operating Income
Actual Results
Spending Variances
Flexible Budget
Activity Variances
Planning Budget
Pizzas
2,230
2,230
2,130
Deliveries
230
230
250
Revenues
$ 40,880.00
$ 740.00
Favourable
$ 40,140.00
$ 1,800.00
Favourable
$ 38,340.00
Expenses:
Pizza Ingrediants
$ 10,630.00
$ 1,487.00
Unfavourable
$ 9,143.00
$ 410.00
Unfavourable
$ 8,733.00
kitchen Staff
$ 6,230.00
$ 60.00
Favourable
$ 6,290.00
$ -
None
$ 6,290.00
Utilities
$ 980.00
$ 266.00
Favourable
$ 1,246.00
$ 20.00
Unfavourable
$ 1,226.00
Delivery Person
$ 690.00
$ -
None
$ 690.00
$ 60.00
Favourable
$ 750.00
Delivery Vehicle
$ 1,024.00
$ 302.00
Favourable
$ 1,326.00
$ 44.00
Favourable
$ 1,370.00
Equipment Depreciation
$ 552.00
$ -
None
$ 552.00
$ -
None
$ 552.00
Rent
$ 2,250.00
$ -
None
$ 2,250.00
$ -
None
$ 2,250.00
Miscellaneous
$ 904.00
$ 239.00
Favourable
$ 1,143.00
$ 10.00
Unfavourable
$ 1,133.00
Total Expenses
$ 23,260.00
$ 620.00
Unfavourable
$ 22,640.00
$ 336.00
Unfavourable
$ 22,304.00
Net Operating Income
$ 17,620.00
$ 120.00
Favourable
$ 17,500.00
$ 1,464.00
Favourable
$ 16,036.00