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:

1) Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for the pizzeria for November.   

	Fixed Cost per Month		Cost per Pizza		Cost per Delivery
Pizza ingredients			$	4.20
Kitchen staff	$	6,310
Utilities	$	810	$	0.30
Delivery person					$	3.10
Delivery vehicle	$	830			$	1.20
Equipment depreciation	$	560
Rent	$	2,270
Miscellaneous	$	930	$	0.15

  

In November, the pizzeria budgeted for 2,160 pizzas at an average selling price of $19 per pizza and for 180 deliveries.

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

  

	Actual Results
Pizzas		2,260
Deliveries		160
Revenue	$	43,690
Pizza ingredients	$	10,810
Kitchen staff	$	6,250
Utilities	$	985
Delivery person	$	496
Delivery vehicle	$	1,026
Equipment depreciation	$	560
Rent	$	2,270
Miscellaneous	$	910

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	2260			2260			2160
Deliveries	y	160			160			180
Revenue	($19* x)	$ 43,690	$     750	F	$ 42,940	$1,900	F	$ 41,040
Expenses:		$ 10,810
Pizza ingredients	($4.20 * x)	$   6,250	$ 3,242	F	$    9,492	$    420	U	$   9,072
Kitchen staff	$                    6,310	$   6,250	$       60	F	$    6,310	$       -	None	$   6,310
Utilities	($810 + $0.30 * x)	$       985	$     503	F	$    1,488	$      30	U	$   1,458
Delivery Person	($3.10* y)	$       496	$        -	None	$        496	$      62	F	$       558
Delivery Vehicle	($830 + $1.20 * y)	$   1,026	$         4	U	$    1,022	$      24	F	$   1,046
Equipment depreciation	$                        560	$       560	$        -	None	$        560	$       -	None	$       560
Rent	$                    2,270	$   2,270	$        -	None	$    2,270	$       -	None	$   2,270
Miscellaneous	($930 + $0.15 * x)	$       910	$     359	F	$    1,269	$      15	U	$   1,254
Total expense		$ 18,747	$ 4,160	F	$ 22,907	$    379	U	$ 22,528
Net operating income		$ 24,943	$ 4,910	F	$ 20,033	$1,521	F	$ 18,512