Milano Pizza is a small neighborhood pizzeria that has a small area for in-store
ID: 2589113 • 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 Cost Delivery per 5.00 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
Computation of flexible budget performance report:
Actual results
Revenue and spending variance
Flexible budget
Activity variance
Planning budget
Pizzas
1,840
1,740
Deliveries
180
200
Revenue
24,530
610
F
23,920
1,300
F
22,620
Expenses
Pizza ingredients
8,290
910
F
9,200
500
U
8,700
Kitchen staff
5,970
60
F
6,030
-
6,030
Utilities
915
1,411
F
2,326
90
U
2,236
Delivery person
486
-
NONE
486
(54)
F
540
Delivery vehicle
998
70
F
1,068
(42)
F
1,110
Equipment deprecation
448
-
NONE
448
-
448
Rent
1,990
-
NONE
1,990
-
1,990
Miscellaneous
826
240
F
1,066
15
U
1,051
Total expenses
19,923
2,691
F
22,614
509
U
22,105
Net operating income
4,607
3,301
F
1,306
791
F
515
Actual results
Revenue and spending variance
Flexible budget
Activity variance
Planning budget
Pizzas
1,840
1,740
Deliveries
180
200
Revenue
24,530
610
F
23,920
1,300
F
22,620
Expenses
Pizza ingredients
8,290
910
F
9,200
500
U
8,700
Kitchen staff
5,970
60
F
6,030
-
6,030
Utilities
915
1,411
F
2,326
90
U
2,236
Delivery person
486
-
NONE
486
(54)
F
540
Delivery vehicle
998
70
F
1,068
(42)
F
1,110
Equipment deprecation
448
-
NONE
448
-
448
Rent
1,990
-
NONE
1,990
-
1,990
Miscellaneous
826
240
F
1,066
15
U
1,051
Total expenses
19,923
2,691
F
22,614
509
U
22,105
Net operating income
4,607
3,301
F
1,306
791
F
515