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 $ 4.80 Kitchen staff $ 6,210 Utilities $ 760 $ 0.80 Delivery person $ 2.60 Delivery vehicle $ 780 $ 1.80 Equipment depreciation $ 520 Rent $ 2,170 Miscellaneous $ 880 $ 0.20 In November, the pizzeria budgeted for 2,010 pizzas at an average selling price of $14 per pizza and for 210 deliveries. Data concerning the pizzeria’s operations in November appear below: Actual Results Pizzas 2,110 Deliveries 190 Revenue $ 30,240 Pizza ingredients $ 9,910 Kitchen staff $ 6,150 Utilities $ 960 Delivery person $ 494 Delivery vehicle $ 1,016 Equipment depreciation $ 520 Rent $ 2,170 Miscellaneous $ 880 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

Milano Pizza
Flexible Budget Report
For the month ended November 30
		Actual results	Revenue and Spending Variances		Flexible Budget	Activity Variance		Planning Budget
Pizzas	x	2110			2110			2010
Deliveries	y	190			190			210
Revenue	($14* x)	$ 30,240	$      700	F	$ 29,540	$1,400	F	$ 28,140
Expenses:
Pizza ingredients	($4.80 * x)	$   9,910	$      218	F	$ 10,128	$    480	U	$   9,648
Kitchen staff	$                    6,210	$   6,150	$         60	F	$    6,210	$       -	None	$   6,210
Utilities	($760 + $0.80 * x)	$       960	$   1,488	F	$    2,448	$      80	U	$   2,368
Delivery Person	($2.60* y)	$       494	$          -	None	$        494	$      52	F	$       546
Delivery Vehicle	($780 + $1.80 * y)	$   1,016	$      106	F	$    1,122	$      36	F	$   1,158
Equipment depreciation	$                        520	$       520	$          -	None	$        520	$       -	None	$       520
Rent	$                    2,170	$   2,170	$          -	None	$    2,170	$       -	None	$   2,170
Miscellaneous	($880 + $0.20 * x)	$       880	$      422	F	$    1,302	$      20	U	$   1,282
Total expense		$ 22,100	$   2,294	F	$ 24,394	$    492	U	$ 23,902
Net operating income		$   8,140	$   2,994	F	$    5,146	$    908	F	$   4,238