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 \$ 4.60 Kitchen staff \$ 5,950 Utilities \$ 630 \$ 0.50 Delivery person \$ 3.30 Delivery vehicle \$ 650 \$ 1.70 Equipment depreciation \$ 416 Rent \$ 1,910 Miscellaneous \$ 750 \$ 0.25

In November, the pizzeria budgeted for 1,620 pizzas at an average selling price of \$17 per pizza and for 240 deliveries.

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

 Actual Results Pizzas 1,720 Deliveries 220 Revenue \$ 29,810 Pizza ingredients \$ 7,570 Kitchen staff \$ 5,890 Utilities \$ 895 Delivery person \$ 726 Delivery vehicle \$ 990 Equipment depreciation \$ 416 Rent \$ 1,910 Miscellaneous \$ 802

Required:

1. Compute the revenue and spending 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.)

 Actual Results Flexible Budget Variance [A-B] Revenue 29810 1720*17=29240 570 F less:cost Pizza ingredients 7570 1720*4.6=7912 342 F Kitchen staff 5890 5950 60 F Utilities 895 [1720*.50]+630=1490 595 F Delivery person 726 220*3.3=726 0 no effect/None Delivery vehicle 990 220*1.7=374 616 U Equipment depreciation 416 416 0 no effect/None Rent 1910 1910 0 no effect/None Miscellaneous 802 [1720*.25]+750 = 1180 378 F Total cost 19199 19958 759 F Net income /(loss) 10611 9282 1329 F

#### Earn Coins

Coins can be redeemed for fabulous gifts.