Milano Pizza is a small neighborhood pizzeria that has a small area for in-store
ID: 2534611 • 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 1,800 pizzas at an average selling price of $15 per pizza and for 220 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 $ 4.10 Kitchen staff $ 6,070 Utilities $ 690 $ 0.10 Delivery person $ 2.90 Delivery vehicle $ 710 $ 2.30 Equipment depreciation $ 464 Rent $ 2,030 Miscellaneous $ 810 $ 0.05
Explanation / Answer
Answers
Milano Pizza
Flexible Budget Performance Report
For the Month Ended November 30
Actual Results
Flexible Budget
Planning Budget
Pizzas
1,900
0
None
1,900
100
Favourable
1,800
Deliveries
200
0
None
200
20
Unfavourable
220
Revenue
$ 29,130.00
$ 630.00
Favourable
$ 28,500.00
$ 1,500.00
Favourable
$ 27,000.00
Expenses:
Pizza ingredients
$ 8,650.00
$ 860.00
Unfavourable
$ 7,790.00
$ 410.00
Unfavourable
$ 7,380.00
Kitchen staff
$ 6,010.00
$ 60.00
Favourable
$ 6,070.00
$ -
None
$ 6,070.00
Utilities
$ 925.00
$ 45.00
Unfavourable
$ 880.00
$ 10.00
Unfavourable
$ 870.00
Delivery person
$ 580.00
$ -
None
$ 580.00
$ 58.00
Favourable
$ 638.00
Delivery vehicle
$ 1,002.00
$ 168.00
Favourable
$ 1,170.00
$ 46.00
Favourable
$ 1,216.00
Equipment depreciation
$ 464.00
$ -
None
$ 464.00
$ -
None
$ 464.00
Rent
$ 2,030.00
$ -
None
$ 2,030.00
$ -
None
$ 2,030.00
Miscellaneous
$ 838.00
$ 67.00
Favourable
$ 905.00
$ 5.00
Unfavourable
$ 900.00
Total expense
$ 20,499.00
$ 610.00
Unfavourable
$ 19,889.00
$ 321.00
Unfavourable
$ 19,568.00
Net operating income
$ 8,631.00
$ 20.00
Favourable
$ 8,611.00
$ 1,179.00
Favourable
$ 7,432.00
Actual Results
Flexible Budget
Planning Budget
Pizzas
1900
1900
1800
Deliveries
200
200
220
Revenue
29130
=1900*15
=1800*15
Expenses:
Pizza ingredients
8650
=1900*4.1
=1800*4.1
Kitchen staff
6010
6070
6070
Utilities
925
=690+(0.1*1900)
=690+(0.1*1800)
Delivery person
580
=2.9*200
=2.9*220
Delivery vehicle
1002
=710+(2.3*200)
=710+(2.3*220)
Equipment depreciation
464
464
464
Rent
2030
2030
2030
Miscellaneous
838
=810+(0.05*1900)
=810+(0.05*1800)
Milano Pizza
Flexible Budget Performance Report
For the Month Ended November 30
Actual Results
Flexible Budget
Planning Budget
Pizzas
1,900
0
None
1,900
100
Favourable
1,800
Deliveries
200
0
None
200
20
Unfavourable
220
Revenue
$ 29,130.00
$ 630.00
Favourable
$ 28,500.00
$ 1,500.00
Favourable
$ 27,000.00
Expenses:
Pizza ingredients
$ 8,650.00
$ 860.00
Unfavourable
$ 7,790.00
$ 410.00
Unfavourable
$ 7,380.00
Kitchen staff
$ 6,010.00
$ 60.00
Favourable
$ 6,070.00
$ -
None
$ 6,070.00
Utilities
$ 925.00
$ 45.00
Unfavourable
$ 880.00
$ 10.00
Unfavourable
$ 870.00
Delivery person
$ 580.00
$ -
None
$ 580.00
$ 58.00
Favourable
$ 638.00
Delivery vehicle
$ 1,002.00
$ 168.00
Favourable
$ 1,170.00
$ 46.00
Favourable
$ 1,216.00
Equipment depreciation
$ 464.00
$ -
None
$ 464.00
$ -
None
$ 464.00
Rent
$ 2,030.00
$ -
None
$ 2,030.00
$ -
None
$ 2,030.00
Miscellaneous
$ 838.00
$ 67.00
Favourable
$ 905.00
$ 5.00
Unfavourable
$ 900.00
Total expense
$ 20,499.00
$ 610.00
Unfavourable
$ 19,889.00
$ 321.00
Unfavourable
$ 19,568.00
Net operating income
$ 8,631.00
$ 20.00
Favourable
$ 8,611.00
$ 1,179.00
Favourable
$ 7,432.00