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 $ 4.00 Kitchen staff $ 6,270 Utilities $ 790 $ 0.10 Delivery person $ 2.90 Delivery vehicle $ 810 $ 2.10 Equipment depreciation $ 544 Rent $ 2,230 Miscellaneous $ 910 $ 0.05 In November, the pizzeria budgeted for 2,100 pizzas at an average selling price of $17 per pizza and for 240 deliveries. Data concerning the pizzeria’s actual results in November appear below: Actual Results Pizzas 2,200 Deliveries 220 Revenue $ 38,130 Pizza ingredients $ 10,450 Kitchen staff $ 6,210 Utilities $ 975 Delivery person $ 638 Delivery vehicle $ 1,022 Equipment depreciation $ 544 Rent $ 2,230 Miscellaneous $ 898 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 Flexible Budget Planning Budget Pizzas 2,200 2,200 2,100 Deliveries 220 220 240 Revenue $38,130 $730 F $37,400 $1,700 F $35,700 Expenses: Pizza ingredients 10,450 1,650 F 8,800 400 U 8,400 Kitchen staff 6,210 Utilities 975 Delivery person 638 Delivery vehicle 1,022 Equipment depreciation 544 Rent 2,230 Miscellaneous 898 Total expense 22,967 Net operating income $15,163

Answer 1

Milano Pizza
Flexible Budget Performance Report
For the Month Ended November 30
	Actual Results			Flexible Budget			Planning Budget
Pizzas	2,200			2,200			2,100
Deliveries	220			220			240
Revenue	38,130	730	F	37,400	1,700	F	35,700
Expenses:
Pizza ingredients	10,450	1,650	U	8,800	400	U	8,400
Kitchen staff	6,210	60	F	6,270	-		6,270
Utilities	975	35	F	1,010	10	U	1,000
Delivery person	638	-		638	58	F	696
Delivery vehicle	1,022	250	F	1,272	42	F	1,314
Equipment depreciation	544	-		544	-		544
Rent	2,230	-		2,230	-		2,230
Miscellaneous	898	122	F	1,020	5	U	1,015
Total expense	22,967	1,183	U	21,784	315	U	21,469
Net operating income	15,163	453	U	15,616	1,385	F	14,231