Milano Pizza is a small neighborhood pizzeria that has a small area for in-store

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 2,250 pizzas at an average selling price of $22 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 Cost
per Month Cost per
Pizza Cost per
Delivery Pizza ingredients $ 4.50 Kitchen staff $ 6,370 Utilities $ 840 $ 0.60 Delivery person $ 3.40 Delivery vehicle $ 860 $ 1.50 Equipment depreciation $ 584 Rent $ 2,330 Miscellaneous $ 960 $ 0.10

Explanation / Answer

Calculate Via Gelato revenue and spending variances for June.

Revenue and spending variance Revenue 8660 U Expense Raw material 620 U Wages 460 F Utilities 150 U Rent 0 None Insurance 0 None Miscellanous 210 F Total expense 100 U Net operating income 8760 U

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