Milano Pizza is a small neighborhood pizzeria that has a small

jagguarpaw January 19, 2017 0 Comments

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