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.

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.)

Milano Pizza
Revenue and Spending Variances
For the Month Ended November 30
Actual Results Revenue and Spending Variances Flexible Budget
Revenue $34,410
Expenses:
Pizza ingredients 7,930
Kitchen staff 5,930
Utilities 905
Delivery person 560
Delivery vehicle 994
Equipment depreciation 432
Rent 1,950
Miscellaneous 814
Total expense 19,515
Net operating income $14,895

Homework Answers

Answer #1
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.)

Milano Pizza
Revenue and Spending Variances
For the Month Ended November 30
Actual Results Revenue and Spending Variances Flexible Budget
Revenue $34,410 590 F 33820
Expenses:
Pizza ingredients 7,930 614 F 8544
Kitchen staff 5,930 60 F 5990
Utilities 905 991 F 1896
Delivery person 560 0 None 560
Delivery vehicle 994 20 U 974
Equipment depreciation 432 0 None 432
Rent 1,950 0 None 1950
Miscellaneous 814 134 F 948
Total expense 19,515 1779 F 21294
Net operating income $14,895 2369 F 12526
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