Milano Pizza is a small neighborhood pizzeria that has a small area for in-store
ID: 2545780 • 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 Cost per Cost per per Month Pizza Delivery $ 4.40 Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle $6,350 $ 830 $0.50 $3.30 $1.40 $ 850 Equipment depreciation 576 $2,310 $ 950 Rent Miscellaneous $ 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 Pizzas Deliveries Results 2,320 180 Revenue Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciatiorn Rent Miscellaneous $49,490 11,170 $ 6,290 995 $594 $1,030 $576 $ 2,310 922Explanation / Answer
Planning budget 2,220 200 cost Cost per amount fixed cost per pizza Delvery pizza ingredients 4.4 9768 Kitchen staff 6,350 6,350 Utilities 830 0.5 1940 Delivery person 3.3 660 delivery vehicle 850 1.5 1150 Equipment depreciation 576 576 Rent 2,310 2,310 Miscellaneous 950 0.25 1505 24259 Flexible budget 2,320 180 cost Cost per amount fixed cost per pizza Delvery pizza ingredients 4.4 10208 Kitchen staff 6,350 6,350 Utilities 830 0.5 1990 Delivery person 3.3 594 delivery vehicle 850 1.5 1120 Equipment depreciation 576 576 Rent 2,310 2,310 Miscellaneous 950 0.25 1530 24678 Flexible Budget Performance Report Actual results Revenue & spending Flexible Activity variance Planning Variaance budget Budget Pizzas 2,320 2,320 2,220 Deliveries 180 180 200 Revenue 49,490 770 F 48720 2100 F 46620 Expenses: pizza ingredients 11,170 962 U 10208 440 U 9768 Kitchen staff 6,290 60 F 6,350 0 N 6,350 Utilities 995 995 F 1990 50 U 1940 Delivery person 594 0 N 594 66 F 660 delivery vehicle 1,030 90 F 1120 30 F 1150 Equipment depreciation 576 0 N 576 0 N 576 Rent 2,310 0 N 2,310 0 N 2,310 Miscellaneous 922 608 F 1530 25 U 1505 total expense 23,887 791 F 24678 419 U 24259 net operating income 25,603 1,561 F 24042 1681 F 22361