19 Jan

Milano Pizza is a small neighborhood pizzeria that has a small

by jagguarpaw On: Accounting - 0 Comment

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:

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.)

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 $35,440 Expenses: 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 Total expense 22,676 Net operating income $12,764

 

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