Milano Pizza is a small neighborhood pizzeria that has a small area for in-store
ID: 2545035 • 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. Data concerning the pizzeria's costs appear below: Fixed Cost Cost per Cost per per Month Pizza Delivery $4.40 Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous $5,910 $ 610 0.30 3.10 $ 1.50 630 $ 400 1,870 $ 730 0.15 In November, the pizzeria budgeted for 1,560 pizzas at an average selling price of $15 per pizza and for 220 deliveries Data concerning the pizzeria's operations in November appear below Pizzas Deliveries Revenue Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous Actual Results 1,660 200 $25,450 $ 7,210 5,850 $ 885 $ 620 $ 986 $400 $ 1,870 $ 790Explanation / Answer
Planning budget 1,560 220 cost Cost per amount fixed cost per pizza Delvery pizza ingredients 4.4 6864 Kitchen staff 5,910 5,910 Utilities 610 0.3 1078 Delivery person 3.1 682 delivery vehicle 630 1.5 960 Equipment depreciation 400 400 Rent 1,870 1,870 Miscellaneous 730 0.15 964 18728 Flexible budget 1,660 200 cost Cost per amount fixed cost per pizza Delvery pizza ingredients 4.4 7304 Kitchen staff 5,910 5,910 Utilities 610 0.3 1108 Delivery person 3.1 620 delivery vehicle 630 1.5 930 Equipment depreciation 400 400 Rent 1,870 1,870 Miscellaneous 730 0.15 979 19121 Flexible Budget Performance Report Actual results Revenue & spending Flexible Activity variance Planning Variaance budget Budget Pizzas 1,660 1,660 1,560 Deliveries 200 200 220 Revenue 25,450 550 F 24900 1500 F 23400 Expenses: pizza ingredients 7,210 94 F 7304 440 U 6864 Kitchen staff 5,850 60 F 5,910 0 N 5,910 Utilities 885 223 F 1108 30 U 1078 Delivery person 620 0 N 620 62 F 682 delivery vehicle 986 56 U 930 30 F 960 Equipment depreciation 400 0 N 400 0 N 400 Rent 1,870 0 N 1,870 0 N 1,870 Miscellaneous 790 189 F 979 15 U 964 total expense 18,611 510 F 19121 393 U 18728 net operating income 6,839 1,060 F 5779 1107 F 4672