Milano Pizza is a small neighborhood pizzeria that has a small area for in-store
ID: 2565443 • 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 $ 6,350 $ 830 $0.50 S 3.30 $ 1.40 $ 850 S 576 $ 2,310 $ 950 $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 operations in November appear below: Actual Results 2,320 180 $49,490 $11,170 $ 6,290 $ 995 $ 594 $1,030 $ 576 $ 2,310 $ 922 Pizzas Deliveries Revenue Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous 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 $ 49,490 Revenue and Spending Variances Flexible Budget Revenue Expenses Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous 11,170 6,290 995 594 1,030 576 2,310 922 23,887 $ 25,603 Total expense Net operating incomeExplanation / Answer
Milano Pizza Revenue and Spending Variances For the Month Ended November 30 Actual Results Revenue and Spending Variances Flexible Budget Revenue 49490 770 F 48720 Expenses: Pizza ingredients 11170 962 U 10208 Kitchen staff 6290 60 F 6350 Utilities 995 995 F 1990 Delivery person 594 0 None 594 Delivery vehicle 1030 72 F 1102 Equipment depreciation 576 0 None 576 Rent 2310 0 None 2310 Miscellaneous 922 608 F 1530 Total expense 23887 773 F 24660 Net operating income 25603 1543 F 24060