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 per Delivery Pizza ingredients $ 4.40 Kitchen staff $ 6,130 Utilities $ 720 $ 0.40 Delivery person $ 3.20 Delivery vehicle $ 740 $ 1.40 Equipment depreciation $ 488 Rent $ 2,090 Miscellaneous $ 840 $ 0.20 In November, the pizzeria budgeted for 1,890 pizzas at an average selling price of $18 per pizza and for 250 deliveries. Data concerning the pizzeria’s operations in November appear below: Actual Results Pizzas 1,990 Deliveries 230 Revenue $ 36,480 Pizza ingredients $ 9,190 Kitchen staff $ 6,070 Utilities $ 940 Delivery person $ 736 Delivery vehicle $ 1,008 Equipment depreciation $ 488 Rent $ 2,090 Miscellaneous $ 856 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.)

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	1990			1990			1890
Deliveries	230			230			250
Revenue	36480	660	F	35820	1800	F	34020
Expenses:
Pizza ingredients	9190	434	U	8756	440	U	8316
Kitchen staff	6070	60	F	6130	0	None	6130
Utilities	940	576	F	1516	40	U	1476
Delivery person	736	0	None	736	64	F	800
Delivery vehicle	1008	54	F	1062	28	F	1090
Equipment depreciation	488	0	None	488	0	None	488
Rent	2090	0	None	2090	0	None	2090
Miscellaneous	856	382	F	1238	20	U	1218
Total expense	21378	638	F	22016	408	U	21608
Net operating income	15102	1298	F	13804	1392	F	12412