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. The pizzeria’s cost formulas appear below:

Pizza Ingrediance ( Cost per Pizza $4.70)

Kitchen Staff (Fixed Cost per month $6,190)

Utililites (Fixed cost per month $750 Cost per Pizza $0.70)

Delivery person (Cost per delivery $3.50)

Delivery Vehical (Fixed cost per month $770 Cost per Delivery $1.70)

Equipment Depreciation ( Fixed cost per month $512)

Rent (fixed cost per month $2,150)

Miscellaneous ( fixed cost per month $870 Cost per pizza $.10)

In November, the pizzeria budgeted for 1,980 pizzas at an average selling price of $13 per pizza and for 200 deliveries. Data concerning the pizzeria’s actual results in November appear below:

Actual ResultsPizzas 2,080; Deliveries 180; Revenue $27,730; Pizza ingredients $9,730; Kitchen staff $6,130; Utilities $955; Delivery person $630; Delivery vehicle $1,014; Equipment depreciation $512; Rent $2,150; Miscellaneous $874

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.)

Answer 1

equired: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.)

Revenue (27040-27730)	690 F
Expenses
Pizza Ingrediance	46 F
Kitchen Staff	60 F
Utilities	1251 F
Delivery person	0 None
Delivery vehicle	62 F
Equipment dep	0 None
Rent	0 None
Miscellaneous	204 F
Total expense	1623 F
Net operating income	2313 F