Milano Pizza is a small neighborhood pizzeria that has a small area for in-store
ID: 2401040 • 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:
In November, the pizzeria budgeted for 1,560 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:
1. Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for the pizzeria for November. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
Fixed Costper Month Cost per
Pizza Cost per
Delivery Pizza ingredients $ 4.40 Kitchen staff $ 5,910 Utilities $ 610 $ 0.30 Delivery person $ 3.10 Delivery vehicle $ 630 $ 1.50 Equipment depreciation $ 400 Rent $ 1,870 Miscellaneous $ 730 $ 0.15
Explanation / Answer
Answers
Actual Results
Spending Variances
Flexible Budget
Activity Variances
Planning Budget
Pizzas
1,660
1,660
1,560
Deliveries
200
200
220
Revenues
$ 25,450.00
$ 550.00
Favourable
$ 24,900.00
$ 1,500.00
Favourable
$ 23,400.00
Expenses:
Pizza Ingrediants
$ 7,210.00
$ 94.00
Favourable
$ 7,304.00
$ 440.00
Unfavourable
$ 6,864.00
kitchen Staff
$ 5,850.00
$ 60.00
Favourable
$ 5,910.00
$ -
None
$ 5,910.00
Utilities
$ 885.00
$ 223.00
Favourable
$ 1,108.00
$ 30.00
Unfavourable
$ 1,078.00
Delivery Person
$ 620.00
$ -
None
$ 620.00
$ 62.00
Favourable
$ 682.00
Delivery Vehicle
$ 986.00
$ 56.00
Unfavourable
$ 930.00
$ 30.00
Favourable
$ 960.00
Equipment Depreciation
$ 400.00
$ -
None
$ 400.00
$ -
None
$ 400.00
Rent
$ 1,870.00
$ -
None
$ 1,870.00
$ -
None
$ 1,870.00
Miscellaneous
$ 790.00
$ 189.00
Favourable
$ 979.00
$ 15.00
Unfavourable
$ 964.00
Total Expenses
$ 18,611.00
$ 510.00
Favourable
$ 19,121.00
$ 393.00
Unfavourable
$ 18,728.00
Net Operating Income
$ 6,839.00
$ 1,060.00
Favourable
$ 5,779.00
$ 1,107.00
Favourable
$ 4,672.00
Actual Results
Flexible Budget
Planning Budget
Pizzas
1660
1660
1560
Deliveries
200
200
220
Revenues
25450
=1660*15
=1560*15
Expenses:
Pizza Ingrediants
7210
=1660*4.4
=1560*4.4
kitchen Staff
5850
5910
5910
Utilities
885
=610+(1660*0.3)
=610+(1560*0.3)
Delivery Person
620
=3.1*200
=3.1*220
Delivery Vehicle
986
=630+(1.5*200)
=630+(1.5*220)
Equipment Depreciation
400
400
400
Rent
1870
1870
1870
Miscellaneous
790
=730+(0.15*1660)
=730+(0.15*1560)
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
1,660
1,660
1,560
Deliveries
200
200
220
Revenues
$ 25,450.00
$ 550.00
Favourable
$ 24,900.00
$ 1,500.00
Favourable
$ 23,400.00
Expenses:
Pizza Ingrediants
$ 7,210.00
$ 94.00
Favourable
$ 7,304.00
$ 440.00
Unfavourable
$ 6,864.00
kitchen Staff
$ 5,850.00
$ 60.00
Favourable
$ 5,910.00
$ -
None
$ 5,910.00
Utilities
$ 885.00
$ 223.00
Favourable
$ 1,108.00
$ 30.00
Unfavourable
$ 1,078.00
Delivery Person
$ 620.00
$ -
None
$ 620.00
$ 62.00
Favourable
$ 682.00
Delivery Vehicle
$ 986.00
$ 56.00
Unfavourable
$ 930.00
$ 30.00
Favourable
$ 960.00
Equipment Depreciation
$ 400.00
$ -
None
$ 400.00
$ -
None
$ 400.00
Rent
$ 1,870.00
$ -
None
$ 1,870.00
$ -
None
$ 1,870.00
Miscellaneous
$ 790.00
$ 189.00
Favourable
$ 979.00
$ 15.00
Unfavourable
$ 964.00
Total Expenses
$ 18,611.00
$ 510.00
Favourable
$ 19,121.00
$ 393.00
Unfavourable
$ 18,728.00
Net Operating Income
$ 6,839.00
$ 1,060.00
Favourable
$ 5,779.00
$ 1,107.00
Favourable
$ 4,672.00