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 ingredients $ 4.50 Kitchen staff $ 5,930 Utilities $ 620 $ 0.40 Delivery person $ 3.20 Delivery vehicle $ 640 $ 1.60 Equipment depreciation $ 408 Rent $ 1,890 Miscellaneous $ 740 $ 0.20 In November, the pizzeria budgeted for 1,590 pizzas at an average selling price of $16 per pizza and for 230 deliveries. Data concerning the pizzeria’s actual results in November appear below: Actual Results Pizzas 1,690 Deliveries 210 Revenue $ 27,600 Pizza ingredients $ 7,390 Kitchen staff $ 5,870 Utilities $ 890 Delivery person $ 672 Delivery vehicle $ 988 Equipment depreciation $ 408 Rent $ 1,890 Miscellaneous $ 796 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

Planning budget
				1,590	230
				cost	Cost per	amount
			fixed cost	per pizza	Delvery
pizza ingredients				4.5		7155
Kitchen staff			5,930			5,930
Utilities			620	0.4		1256
Delivery person					3.2	736
delivery vehicle			640		1.6	1008
Equipment depreciation			408			408
Rent			1,890			1,890
Miscellaneous			740	0.2		1058
						19441
Flexible budget
				1,690	210
				cost	Cost per	amount
			fixed cost	per pizza	Delvery
pizza ingredients				4.5		7605
Kitchen staff			5,930			5,930
Utilities			620	0.4		1296
Delivery person					3.2	672
delivery vehicle			640		1.6	976
Equipment depreciation			408			408
Rent			1,890			1,890
Miscellaneous			740	0.2		1078
						19855
		Flexible Budget Performance Report
		Actual results	Revenue & spending		Flexible	Activity variance		Planning
			Variaance		budget			Budget
Pizzas		1,690			1,690			1,590
Deliveries		210			210			230
Revenue		27,600	560	F	27040	1600	F	25440
Expenses:
pizza ingredients		7,390	215	F	7605	450	U	7155
Kitchen staff		5,870	60	F	5,930	0	N	5,930
Utilities		890	406	F	1296	40	U	1256
Delivery person		672	0	N	672	64	F	736
delivery vehicle		988	12	U	976	32	F	1008
Equipment depreciation		408	0	N	408	0	N	408
Rent		1,890	0	N	1,890	0	N	1,890
Miscellaneous		796	282	F	1078	20	U	1058
total expense		18,904	951	F	19855	414	U	19441
net operating income		8,696	1,511	F	7185	1186	F	5999