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:

Fixed Cost per Month Cost per Pizza Cost per Delivery

Pizza ingredient $ 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 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
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 operating income	20383	350	F	20033	1521	F	18512