Milano Pizza is a small neighborhood pizzeria that has a small area for in-store
ID: 2555020 • 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 h ome 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 5 4.70 Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous S 5,970 5 640 S 0.60 S 3.40 5 1.80 5 660 S 424 5 1,930 5 760 S 0.06 In November, the pizzeria budgeted for 1,850 pizzas at an average selling price of S18 per pizza and for 250 deliveries Data concerning the pizzeria's operations in November appear below: Deliveries Revenue Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscel laneous Actual Results 1,750 230 532,080 5 7,750 S 5,910 5 900 5 782 5 992 5 424 S 1,930 5 808 Required 1. Compute the revenue and spending 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 Revenue and Spending Variances For the Month Ended November 30 Actual Results Revenue and Spending Variances Flexible Budget Revenue S 32,080 Expenses Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous 7.750 5,910 900 782 992 424 1.930 08 19.498 S 12,.584 Total expense Net operating incomeExplanation / Answer
Calculate revenue and spending variance :
Actual results Revenue and spending variance Flexible budget Revenue 32080 580 F 31500 Expenses : Pizza ingredients 7750 475 F 8225 Kitchen staff 5910 60 F 5970 Utilities 900 790 F 1690 Delivery person 782 None 782 Delivery vehicle 992 82 F 1074 Equipment depreciation 424 None 424 Rent 1930 None 1930 Miscellaneous 808 57 F 865 Total expense 19496 1464 F 20960 Net operating income 12584 2044 F 10540