Milano Pizza is a small neighborhood pizzeria that has a small area for in-store
ID: 2566123 • 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 conceming the pizzeria's costs appear below Fixed Cost Cost per Cost per per Month Pizza Delivery $5.00 Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous S 6,250 $ 780 $1.00 $ 2.80 $ 2.00 $ 800 S 536 S 2,210 $ 900 $0.10 In November, the pizzeria budgeted for 2,070 pizzas at an average selling price of S16 per pizza and for 230 deliveries Data concerning the pizzeria's operations in November appear below: Actual Results 2,170 210 $35,440 $10,270 $6,190 $ 970 $ 588 $1,020 $536 $2,210 $ 892 Pizzas Deliveries Revenue Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous 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 Flexible Actual Results Revenue and Spending Variances Planning Budget Budget Activity Variances Revenue S 35,440 Expenses: Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous 10,270 6,190 970 588 1,020 536 2,210 892 22,676 S 12,764 Total expense 0 Net operating incomeExplanation / Answer
Flexible Budget performance report is as prepared below:
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 2,170 2,170 2,070 Revenue $35,440 720 F 34,720 1,600 F 33120 Expenses: Pizza ingredients 10,270 -580 F 10,850 500 U 10,350 Kitchen Staff 6,190 -60 F 6,250 0 None 6,250 Utilities 970 -1,980 F 2,950 100 U 2,850 Delivery person 588 0 None 588 -56 F 644 Delivery vehicle 1,020 600 U 420 -40 F 460 Equipment depreciation 536 0 None 536 0 None 536 Rent $2,210 0 None 2,210 0 None 2,210 Miscellaneous $892 -225 F 1,117 10 U 1,107 Total expense 22,676 -2,245 F 24,921 514 U 24,407 Net Operating Income 12,764 -3,910 F 9,799 1,086 F 8,713