Milano Pizza is a small neighborhood pizzeria that has a small area for in-store
ID: 2520244 • 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 1,770 pizzas at an average selling price of $14 per pizza and for 210 deliveries.
Data concerning the pizzeria’s actual results in November appear below:
Required:
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 $ 4.00 Kitchen staff $ 6,050 Utilities $ 680 $ 1.00 Delivery person $ 2.80 Delivery vehicle $ 700 $ 2.20 Equipment depreciation $ 456 Rent $ 2,010 Miscellaneous $ 800 $ 0.20
Explanation / Answer
Planning budget 1,770 210 cost Cost per amount fixed cost per pizza Delvery pizza ingredients 4 7080 Kitchen staff 6,050 6,050 Utilities 680 1 2450 Delivery person 2.8 588 delivery vehicle 700 2.2 1162 Equipment depreciation 456 456 Rent 2,010 2,010 Miscellaneous 800 0.2 1154 20950 Flexible budget 1,870 190 cost Cost per amount fixed cost per pizza Delvery pizza ingredients 4 7480 Kitchen staff 6,050 6,050 Utilities 680 1 2550 Delivery person 2.8 532 delivery vehicle 700 2.2 1118 Equipment depreciation 456 456 Rent 2,010 2,010 Miscellaneous 800 0.2 1174 21370 Flexible Budget Performance Report Actual results Revenue & spending Flexible Activity variance Planning Variaance budget Budget Pizzas 1,870 1,870 1,770 Deliveries 190 190 210 Revenue 26,800 620 F 26180 1400 F 24780 Expenses: pizza ingredients 8,470 990 U 7480 400 U 7080 Kitchen staff 5,990 60 F 6,050 0 N 6,050 Utilities 920 1,630 F 2550 100 U 2450 Delivery person 532 0 N 532 56 F 588 delivery vehicle 1,000 118 F 1118 44 F 1162 Equipment depreciation 456 0 N 456 0 N 456 Rent 2,010 0 N 2,010 0 N 2,010 Miscellaneous 832 342 F 1174 20 U 1154 total expense 20,210 1,160 F 21370 420 U 20950 net operating income 6,590 1,780 F 4810 980 F 3830