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.

Data concerning the pizzeria’s costs appear below:

	Fixed Cost per Month			Cost per Pizza			Cost per Delivery
Pizza ingredients				$	4.30
Kitchen staff	$	6,330
Utilities	$	820		$	0.40
Delivery person							$	3.20
Delivery vehicle	$	840					$	1.30
Equipment depreciation	$	568
Rent	$	2,290
Miscellaneous	$	940		$	0.20

    

In November, the pizzeria budgeted for 2,190 pizzas at an average selling price of $20 per pizza and for 190 deliveries.

Data concerning the pizzeria’s operations in November appear below:

  

	Actual Results
Pizzas		2,290
Deliveries		170
Revenue	$	46,560
Pizza ingredients	$	10,990
Kitchen staff	$	6,270
Utilities	$	990
Delivery person	$	544
Delivery vehicle	$	1,028
Equipment depreciation	$	568
Rent	$	2,290
Miscellaneous	$	916

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 $46,560 Expenses: Pizza ingredients 10,990 Kitchen staff 6,270 Utilities 990 Delivery person 544 Delivery vehicle 1,028 Equipment depreciation 568 Rent 2,290 Miscellaneous 916 Total expense 23,596 Net operating income $22,964

Answer 1