Milano Pizza is a small neighborhood pizzeria that has a small area for in-store
ID: 2530343 • 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 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 actual results 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. 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.)
Explanation / Answer
Actual Revenue and spending variances Flexible budget Activity variances Planning budget Pizzas 1810 1810 1710 Deliveries 170 170 190 Revenue 36800 600 F 36200 2000 F 34200 Expenses: Pizza ingredients 8110 759 F 8869 490 U 8379 Kitchen staff 5950 60 F 6010 0 None 6010 Utilities 910 1198 F 2108 80 U 2028 Delivery person 442 0 None 442 52 F 494 Delivery vehicle 996 24 F 1020 40 F 1060 Equipment depreciation 440 0 None 440 0 None 440 Rent 1970 0 None 1970 0 None 1970 Miscellaneous 820 141 F 961 10 U 951 Total expenses 19638 2182 F 21820 488 U 21332 Net operating income 17162 2782 F 14380 1512 F 12868