Milano Pizza is a small neighborhood pizzeria that has a small area for in-store
ID: 2414469 • 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. Data concerning the pizzeria’s costs appear below: Fixed Cost per Month Cost per Pizza Cost per Delivery Pizza ingredients $ 4.90 Kitchen staff $ 6,010 Utilities $ 660 $ 0.80 Delivery person $ 2.60 Delivery vehicle $ 680 $ 2.00 Equipment depreciation $ 440 Rent $ 1,970 Miscellaneous $ 780 $ 0.10 In November, the pizzeria budgeted for 1,710 pizzas at an average selling price of $20 per pizza and for 190 deliveries. Data concerning the pizzeria’s operations in November appear below: Actual Results Pizzas 1,810 Deliveries 170 Revenue $ 36,800 Pizza ingredients $ 8,110 Kitchen staff $ 5,950 Utilities $ 910 Delivery person $ 442 Delivery vehicle $ 996 Equipment depreciation $ 440 Rent $ 1,970 Miscellaneous $ 820 Required: 1. Compute the revenue and spending variances for the pizzeria for November
Explanation / Answer
Fixed Cost per month Cost per Pizza Cosr per delivery Pizza ingredients $ 4.90 Kitchen staff $ 6,010.00 Utilities $ 660.00 $ 0.80 Delivery Person $ 2.60 Delivery Vehicle $ 680.00 $ 2.00 Equipment Dep $ 440.00 Rent $ 1,970.00 Miscellaneous $ 780.00 $ 0.10 Budger Unit = 1710 @ $20 pizza and for 190 deliveries Pizza 1810 Deliveries 170 revenue 36800 Pizza Ingredient 8110 Kitchen Staff 5950 Utilities 910 Delivery Person 442 Delivery Vehicle 996 Equipment Dep 440 Rent 1970 Miscellaneous 820 Budgeted Standard Cost of Actuals Variance Actual results revenue and spending variances Pizza (Q1) 1710 1810 1810 Deliveries (Q2) 190 170 170 revenue [1710*$20] $ 34,200.00 36800 $ 2,600.00 F 36800 Expenses Pizza Ingredient [4.9*Q1] $ 8,379.00 8869 $ 490.00 U 8110 759 F Kitchen Staff 6010 6010 0 5950 60 F Utilities [660+0.80*Q1] 2028 2108 80 U 910 1198 F Delivery Person [2.6*Q2] 494 442 52 F 442 0 Delivery Vehicle [Q2*2.0] 380 340 40 F 996 656 F Equipment Dep 440 440 0 440 0 Rent 1970 1970 0 1970 0 Miscellaneous [780+0.10*Q1] 951 961 10 U 820 141 F Total Expense $ 20,652.00 $ 21,140.00 488 U $ 19,638.00 1502 F Net Operating Income $ 13,548.00 $ 15,660.00 2112 F $ 17,162.00 $ 1,502.00 F