Question

Problem 9-21 (Algo) More Than One Cost Driver [LO9-2, LO 9-3, LO 9-4, LO9-5] 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 Cost per Cost per Pizza Delivery per Month Pizza ingredients 4.60 Kitchen staff $5,950 Utilities 630 0.50 Delivery person $3.30 Delivery vehicle Equipment depreciation $ 650 $1.70 416 Rent $1,910 Miscellaneous $ 750 0.25 In November, the pizzeria budgeted for 1,620 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 1,720 Deliveries 220 $29,810 $ 7,570 5,890 Revenue Pizza ingredients Kitchen staff $ Utilities $ 895 726 Delivery person Delivery vehicle Equipment depreciation 990 $ 416 Rent $ 1,910 Miscellaneous 802

Answer 1

Answer

	Actual Results	Revenue & Spending Variance		Flexible Budget	Activity Variances		Planning Budget
Pizzas	1,720			1,720			1,620
Deliveries	220			220			240
Revenues	$                     29,810.00	$                                   570.00	Favourable	$                     29,240.00	$                                          1,700.00	Favourable	$                                                 27,540.00
Expenses:
Pizza Ingrediants	$                        7,570.00	$                                   342.00	Favourable	$                       7,912.00	$                                              460.00	Unfavourable	$                                                    7,452.00
kitchen Staff	$                        5,890.00	$                                     60.00	Favourable	$                       5,950.00	$                                                       -	None	$                                                    5,950.00
Utilities	$                           895.00	$                                   595.00	Favourable	$                       1,490.00	$                                                50.00	Unfavourable	$                                                    1,440.00
Delivery Person	$                           726.00	$                                            -	None	$                           726.00	$                                                66.00	Favourable	$                                                       792.00
Delivery Vehicle	$                           990.00	$                                     34.00	Favourable	$                       1,024.00	$                                                34.00	Favourable	$                                                    1,058.00
Equipment Depreciation	$                           416.00	$                                            -	None	$                           416.00	$                                                       -	None	$                                                       416.00
Rent	$                        1,910.00	$                                            -	None	$                       1,910.00	$                                                       -	None	$                                                    1,910.00
Miscellaneous	$                           802.00	$                                   378.00	Favourable	$                       1,180.00	$                                                25.00	Unfavourable	$                                                   1,155.00
Total Expenses	$                     19,199.00	$                               1,409.00	Favourable	$                     20,608.00	$                                              435.00	Unfavourable	$                                                 20,173.00
Net Operating Income	$                     10,611.00	$                               1,979.00	Favourable	$                       8,632.00	$                                          1,265.00	Favourable	$                                                    7,367.00

--Working

	Actual Results	Flexible Budget	Planning Budget
Pizzas	1720	1720	1620
Deliveries	220	220	240
Revenues	29810	=1720*17	=1620*17
Expenses:
Pizza Ingrediants	7570	=1720*4.6	=1620*4.6
kitchen Staff	5890	5950	5950
Utilities	895	=630+(1720*0.5)	=630+(1620*0.5)
Delivery Person	726	=220*3.3	=240*3.3
Delivery Vehicle	990	=650+(220*1.7)	=650+(240*1.7)
Equipment Depreciation	416	416	416
Rent	1910	1910	1910
Miscellaneous	802	=750+(1720*0.25)	=750+(1620*0.25)