Question

Milano Pizza is a small neighborhood pizzeria that has a small area for in-store dining as...

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 per
Delivery
Pizza ingredients $ 4.80
Kitchen staff $ 5,990
Utilities $ 650 $ 0.70
Delivery person $ 3.50
Delivery vehicle $ 670 $ 1.90
Equipment depreciation $ 432
Rent $ 1,950
Miscellaneous $ 770 $ 0.10

    

In November, the pizzeria budgeted for 1,680 pizzas at an average selling price of $19 per pizza and for 180 deliveries.

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

  

Actual
Results
Pizzas 1,780
Deliveries 160
Revenue $ 34,410
Pizza ingredients $ 7,930
Kitchen staff $ 5,930
Utilities $ 905
Delivery person $ 560
Delivery vehicle $ 994
Equipment depreciation $ 432
Rent $ 1,950
Miscellaneous $ 814


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.)

Homework Answers

Answer #1
Milano Pizza
Flexible Budget Performance Report
For the Month Ended November 30
Actual Results Revenue and spending variances Flexible Budget Activity variances Planning Budget
Pizzas 1780 1780 1680
Deliveries 160 160 180
Revenue 34410 590 F 33820 1900 F 31920
Expenses:
Pizza ingredients 7930 614 F 8544 480 U 8064
Kitchen staff 5930 60 F 5990 0 None 5990
Utilities 905 991 F 1896 70 U 1826
Delivery person 560 0 None 560 70 F 630
Delivery vehicle 994 20 U 974 38 F 1012
Equipment depreciation 432 0 None 432 0 None 432
Rent 1950 0 None 1950 0 None 1950
Miscellaneous 814 134 F 948 10 U 938
Total expense 19515 1779 F 21294 452 U 20842
Net operating income 14895 2369 F 12526 1448 F 11078
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