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.

The pizzeria’s cost formulas appear below:

Fixed Cost
per Month
Cost per
Pizza
Cost per
Delivery
Pizza ingredients $ 4.20
Kitchen staff $ 6,310
Utilities $ 810 $ 0.30
Delivery person $ 3.10
Delivery vehicle $ 830 $ 1.20
Equipment depreciation $ 560
Rent $ 2,270
Miscellaneous $ 930 $ 0.15

  

In November, the pizzeria budgeted for 2,160 pizzas at an average selling price of $19 per pizza and for 180 deliveries.

Data concerning the pizzeria’s actual results in November appear below:

  

Actual Results
Pizzas 2,260
Deliveries 160
Revenue $ 43,690
Pizza ingredients $ 10,810
Kitchen staff $ 6,250
Utilities $ 985
Delivery person $ 496
Delivery vehicle $ 1,026
Equipment depreciation $ 560
Rent $ 2,270
Miscellaneous $ 910

Required:

1. Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for the pizzeria for Novembe

Homework Answers

Answer #1

1. Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for the pizzeria for Novembe

Actual Revenue and spending variance Flexible budget Activity variance Static budget
Revenue 43690 750 F 42940 1900 F 41040
Expenses
Pizza ingredients 10810 1318 U 9492 420 U 9072
Kitchen staff 6250 60 F 6310 0 None 6310
Utilities 985 503 F 1488 30 U 1458
Delivery person 496 0 NOne 496 62 F 558
Delivery vehicle 1026 4 U 1022 24 F 1046
Equipment depreciation 560 0 None 560 0 None 560
Rent 2270 0 None 2270 0 None 2270
Miscellaneous 910 359 F 1269 15 U 1254
Total Expense 23307 400 U 22907 379 U 22528
Net income 20383 350 F 20033 1521 F 18512
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