Question

Problem 9-19 More Than One Cost Driver [LO9-2, LO9-3]

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				$	4.90
Kitchen staff	$	6,010
Utilities	$	660		$	0.80
Delivery person							$	2.60
Delivery vehicle	$	680					$	2.00
Equipment depreciation	$	440
Rent	$	1,970
Miscellaneous	$	780		$	0.10

  

In November, the pizzeria budgeted for 1,710 pizzas at an average selling price of $20 per pizza and for 190 deliveries.

Data concerning the pizzeria’s actual results in November appear below:

  

	Actual Results
Pizzas		1,810
Deliveries		170
Revenue	$	36,800
Pizza ingredients	$	8,110
Kitchen staff	$	5,950
Utilities	$	910
Delivery person	$	442
Delivery vehicle	$	996
Equipment depreciation	$	440
Rent	$	1,970
Miscellaneous	$	820

Required:

1. Compute the revenue and spending 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