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 Cost per Cost per Delivery Pizza per Month Pizza ingredients Kitchen staff $ 4.70 $5,970 $ 0.60 Utilities 640 Delivery person Delivery vehicle Equipment depreciation $3.40 $1.80 660 424 $1,930 Rent Miscellaneous $0.06 760 In November, the pizzeria budgeted for 1,650 pizzas at an average selling price of $18 per pizza and for 250 deliveries. Data concerning the pizzeria's actual results in November appear below: Actual Results Pizzas 1,750 230 Deliveries 32,080 7,750 5,910 Revenue Pizza ingredients Kitchen staff Utilities 900 Delivery person Delivery vehicle Equipment depreciation 782 $ 992 424 Rent 1,930 Miscellaneous 808

Answer 1

	Milano Pizza
	Flexible Budget Performance Report
	For the Month Ended November 30
	Actual Results	Revenue and spending variances		Flexible Budget	Activity variances		Planning Budget
Pizzas	1750			1750			1650
Deliveries	230			230			250
Revenue	32080	580	F	31500	1800	F	29700
Expenses:
Pizza ingredients	7750	475	F	8225	470	U	7755
Kitchen staff	5910	60	F	5970	0	None	5970
Utilities	900	790	F	1690	60	U	1630
Delivery person	782	0	None	782	68	F	850
Delivery vehicle	992	82	F	1074	36	F	1110
Equipment depreciation	424	0	None	424	0	None	424
Rent	1930	0	None	1930	0	None	1930
Miscellaneous	808	57	F	865	6	U	859
Total expense	19496	1464	F	20960	432	U	20528
Net operating income	12584	2044	F	10540	1368	F	9172