Question: 10-3 Milano Pizza is a small neighborhood pizzeria…
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 | $ | 5.00 | |||||||
| Kitchen staff | $ | 6,250 | |||||||
| Utilities | $ | 780 | $ | 1.00 | |||||
| Delivery person | $ | 2.80 | |||||||
| Delivery vehicle | $ | 800 | $ | 2.00 | |||||
| Equipment depreciation | $ | 536 | |||||||
| Rent | $ | 2,210 | |||||||
| Miscellaneous | $ | 900 | $ | .10 | |||||
In November, the pizzeria budgeted for 2,070 pizzas at an average selling price of $16 per pizza and for 230 deliveries.
Data concerning the pizzeria’s operations in November appear below:
| Actual Results |
|||
| Pizzas | 2,170 | ||
| Deliveries | 210 | ||
| Revenue | $ | 35,440 | |
| Pizza ingredients | $ | 10,270 | |
| Kitchen staff | $ | 6,190 | |
| Utilities | $ | 970 | |
| Delivery person | $ | 588 | |
| Delivery vehicle | $ | 1,020 | |
| Equipment depreciation | $ | 536 | |
| Rent | $ | 2,210 | |
| Miscellaneous | $ | 892 | |
Required:
- 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.)
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