Milano Pizza is a small neighborhood pizzeria that hasasmal area for in- store d
ID: 2523853 • Letter: M
Question
Milano Pizza is a small neighborhood pizzeria that hasasmal area for in- store dining as well as offering take-out and free home delivery services The pizzeria's owner has determined thet the shop hes two major cost drivers-the number of pizzas sold and the number of deliveries made. Deta conceming the pizzeria's coets appear below Fbed Cost Cost per Cost per per Month Pizza Dellvery $3.80 $0.05 Ptzza Ingredients $630 $3.50 $1.50 Delivery person $275 $1,830 $820 Rent $o.15 In November, the pizzeria budgeted for 1,200 pizzas at an average selling price of $13.50 per pizza and for 180 deliveries. Data conceming the pizzeria's operations in November appear below 1,240 174 $17.420 $4.985 $5.281 $984 Pzza ingredents.. Kitchen staff.... Delivery person Delivery vehicle $655 $275 $1,830 Miscellaneous Required: 1. Prepare a flexible budget performance report that shows both revenue and spending variances and activity variances for the pizzeria for November 2. Explain the activity variancesExplanation / Answer
Answer 1. Milano Pizza Flexible Budget Performance Report For the Month Ended Nov 30 Actual Results Revenue & Spending Variances Flexible Budget Activity Variances Planning Budget Pizzas Sold 1,240 1,240 1,200 No. Of Deliveries 174 174 180 Revenue - Sales revenue 17,420 680 F 16,740 540 F 16,200 Less: Expenses: Pizza Ingredients 4,985 273 U 4,712 152 U 4,560 Kitchen Staff 5,281 61 U 5,220 - U 5,220 Utilities 984 292 U 692 2 U 690 Delivery Person 609 - 609 21 F 630 Delivery Vehicle 655 146 F 801 9 F 810 Equipment Depreciation 275 - 275 - 275 Rent 1,830 - 1,830 - 1,830 Miscellaneous 954 52 F 1,006 6 U 1,000 Total Expenses 15,573 428 U 15,145 130 U 15,015 Opearting Income 1,847 252 F 1,595 410 F 1,185 Answer 2. The Income has incereased due to increase in the number of pizza sold and less number of deliveries. The Expenses of Pizza ,Utilities & Miscellaneous are unfavourable due to incrase in the number of pizzas sold. The cost of Delivery Person and Delivery vehicles are favourable dur to lesser number of pizzas delivered.