Milano Pizza is a small neighborhood pizzeria that has a small area for in-store
ID: 2559892 • 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 per Month Cost per Pizza 5.00 Cost per Delivery Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous $ 6,030 $ 670 0.90 $2.70 $ 2.10 $690 $448 $ 1,990 $ 790 $ 0.15 In November, the pizzeria budgeted for 1,740 pizzas at an average selling price of $13 per pizza and for 200 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 1,840 180 $24,530 $ 8,290 $5,970 $ 915 $ 486 $ 998 $448 $ 1,990 $826Explanation / Answer
Flexible Budget Performance Report is as prepared below:
Working:
Milano Pizzza Flexible Budget Performance Report For the month ended November 30 Particulars Actual Results Revenue and spending variances Flexible Budget Activity variances Planning Budget Pizza 1,840 1,840 1,740 Revenue $24,530 610 F 23,920 1,300 F 22620 Expenses: Pizza ingredients 8,290 -910 F 9,200 500 U 8,700 Kitchen Staff 5,970 -60 F 6,030 0 None 6,030 Utilities 915 -1,411 F 2,326 90 U 2,236 Delivery person 486 0 None 486 -54 F 540 Delivery vehicle 998 -70 F 1,068 -42 F 1,110 Equipment depreciation 448 0 None 448 0 None 448 Rent $1,990 0 None 1,990 0 None 1,990 Miscellaneous $826 -240 F 1,066 15 U 1,051 Total expense 19,923 -2,691 F 22,614 509 U 22,105 Net Operating Income 4,607 -4,472 F 1,306 791 F 515