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ID: 2513498 • Letter: #
Question
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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 1,650 pizzas at an average selling price of $18 per pizza and for 250 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.)
Fixed Cost
per Month Cost per
Pizza Cost per
Delivery Pizza ingredients $ 4.70 Kitchen staff $ 5,970 Utilities $ 640 $ .60 Delivery person $ 3.40 Delivery vehicle $ 660 $ 1.80 Equipment depreciation $ 424 Rent $ 1,930 Miscellaneous $ 760 $ .06
Explanation / Answer
Planning budget 1,650 250 cost Cost per amount fixed cost per pizza Delvery pizza ingredients 4.7 7755 Kitchen staff 5,970 5,970 Utilities 640 0.6 1630 Delivery person 3.4 850 delivery vehicle 660 1.8 1110 Equipment depreciation 424 424 Rent 1,930 1,930 Miscellaneous 760 0.06 859 20528 Flexible budget 1,750 230 cost Cost per amount fixed cost per pizza Delvery pizza ingredients 4.7 8225 Kitchen staff 5,970 5,970 Utilities 640 0.6 1690 Delivery person 3.4 782 delivery vehicle 660 1.8 1074 Equipment depreciation 424 424 Rent 1,930 1,930 Miscellaneous 760 0.06 865 20960 Flexible Budget Performance Report Actual results Revenue & spending Flexible Activity variance Planning Variaance budget Budget Pizzas 1,750 1,750 1,650 Deliveries 230 230 250 Revenue 32,080 580 F 31500 1800 F 29700 Expenses: pizza ingredients 7,750 475 F 8225 470 U 7755 Kitchen staff 5,910 60 F 5,970 0 N 5,970 Utilities 900 790 F 1690 60 U 1630 Delivery person 782 0 N 782 68 F 850 delivery vehicle 992 82 F 1074 36 F 1110 Equipment depreciation 424 0 N 424 0 N 424 Rent 1,930 0 N 1,930 0 N 1,930 Miscellaneous 808 57 F 865 6 U 859 total expense 19,496 1,464 F 20960 432 U 20528 net operating income 12,584 2,044 F 10540 1368 F 9172
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