Problem 9-20 More Than One Cost Driver [LO9-4, LO9-5] Milano Pizza is a small ne

Question

Problem 9-20 More Than One Cost Driver [LO9-4, LO9-5]

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:

       Data concerning the pizzeria’s operations in November appear below:

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 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:

   In November, the pizzeria budgeted for 1,200 pizzas at an average selling price of $13.50 per pizza and for 180 deliveries.

       Data concerning the pizzeria’s operations in November appear below:

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.)

Explanation / Answer

The flexible budget performance is report is given below:

Milano Pizza Flexible Budget Performance Report For the Month Ended November 30 Actual Results Revenue and Spending Variances Flexible Budget Activity Variances Planning Budget Revenue 17,420 680 F 16,740 (1,240*13.50) 540 F 16,200 (1,200*13.50) Expenses Pizza Ingredients 4,985 273 U 4,712 (1,240*3.80) 152 U 4,560 (1,200*3.80) Kitchen Staff 5,281 61 U 5,220 0 None 5,220 Utilities 984 292 U 692 (630 + 1,240*.05) 2 U 690 (630+1,200*.06) Delivery Person 609 0 None 609 (174*3.50) 21 F 630 (180*3.50) Delivery Vehicle 655 146 F 801 (540+174*1.5) 9 F 810 (540+180*1.5) Equipment Depreciation 275 0 None 275 0 None 275 Rent 1,830 0 None 1,830 0 None 1,830 Miscellaneous 954 52 F 1,006 (820+1,240*0.15) 6 U 1,000 (820+1,200*0.15) Total Expenses 15,573 428 U 15,145 130 U 15,015 Net Operating Income $1,847 252 (1,847 - 1,595) F $1,595 410 (1,595 - 1,185) F $1,185

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