Milano Pizza is a small neighborhood pizzeria that has a small area for in-store
ID: 2552189 • 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 3.80 Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous 5,220 630 0.05 3.50 1.50 $ 540 $275 1,830 $820 $ 0.15 In November, the pizzeria budgeted for 1,200 pizzas at an average selling price of $13.50 per pizza and for 180 deliveries. Data concerning the pizzeria's actual results in November appear below: Actual Results Pizzas Deliveries 1,240 174 Revenue Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous $17,420 $ 4,985 $ 5,281 $ 984 $609 $655 $ 275 $ 1,830 $954 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.) Milano Pizza Flexible Budget Performance Report For the Month Ended November 30 Actual Results Flexible Bud Planning Budget Pizzas 1,240 174 Revenue $17,420 Expenses Pizza Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous 4,985 5,281 984 609 655 275 1,830 954 15,573 1,847 Total expense Net operating incomeExplanation / Answer
Particulars Actual Revenue and spending variance Flexible budget Activity variance Static budget Pizzas 1240 1240 1200 Deliveries 174 174 180 Revenue 17,420 680 F 16740 540 F 16200 Expenses Pizza ingredients 4985 273 U 4712 152 U 4560 Kitchen staff 5281 61 U 5220 0 5220 Utilities 984 292 U 692 2 U 690 Delivery person 609 0 609 21 F 630 Delivery vehicle 655 146 F 801 9 F 810 Equipment depreciation 275 0 275 0 275 Rent 1830 0 1830 1830 Miscellaneous 954 52 F 1006 6 U 1000 Total expense 15573 428 U 15145 130 U 15015 Net operating income 1847 252 F 1595 410 F 1185