Milano Pizza is a small neighborhood pizzeria that has a small area for in-store
ID: 2536900 • 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 Delivery Cost per Pizza $ 4.40 Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous 6,350 S 830 S 0.50 $ 850 $ 576 S 2,310 $ 950 1.40 $ 0.25 In November, the pizzeria budgeted for 2,220 pizzas at an average selling price of $21 per pizza and for 200 deliveries. Data concerning the pizzeria's actual results in November appear below: Actual Results Pizzas Deliveries 2,320 180 Revenue Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous $ 49,490 $ 11,170 $ 6,290 $ 995 $ 594 $1,030 $ 576 $ 2,310 $ 922Explanation / Answer
Actual Revenue and spending variances Flexible budget Activity variances Planning budget Pizzas 2320 2320 2220 Deliveries 180 180 200 Revenue 49490 770 F 48720 2100 F 46620 Expenses: Pizza ingredients 11170 962 U 10208 440 U 9768 Kitchen staff 6290 60 F 6350 0 None 6350 Utilities 995 995 F 1990 50 U 1940 Delivery person 594 0 None 594 66 F 660 Delivery vehicle 1030 72 F 1102 28 F 1130 Equipment depreciation 576 0 None 576 0 None 576 Rent 2310 0 None 2310 0 None 2310 Miscellaneous 922 608 F 1530 25 U 1505 Total expenses 23887 773 F 24660 421 U 24239 Net operating income 25603 1543 F 24060 1679 F 22381