Question

2.

value:
10.00 points

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			$	4.70
Kitchen staff	$	5,970
Utilities	$	640	$	0.60
Delivery person					$	3.40
Delivery vehicle	$	660			$	1.80
Equipment depreciation	$	424
Rent	$	1,930
Miscellaneous	$	760	$	0.06

  

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 operations in November appear below:

  

	Actual Results
Pizzas		1,750
Deliveries		230
Revenue	$	32,080
Pizza ingredients	$	7,750
Kitchen staff	$	5,910
Utilities	$	900
Delivery person	$	782
Delivery vehicle	$	992
Equipment depreciation	$	424
Rent	$	1,930
Miscellaneous	$	808

Required:

1.	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.)

     

rev: 08_14_2014_QC_51991

Answer 1

Static Budget
Income
Sales Revenue	$            29,700	=1650*18
Expenses
Pizza Ingredients	$               7,755	=1650*4.7
Kitchen Staff	$               5,970	5970
Utilities	$               1,630	=1650*0.6+640
Delivery Person	$                  850	=250*3.4
Delivery Vehicle	$               1,110	=250*1.8+660
Equipment Depreciation	$                  424	424
Rent	$               1,930	1930
Misc Costs	$                  859	=1650*0.06+760
Total Expenses	$            20,528
Net Income	$               9,172

Flexible Budget
Income
Sales Revenue	$            31,500	=1750*18
Expenses
Pizza Ingredients	$               8,225	=1750*4.7
Kitchen Staff	$               5,970	5970
Utilities	$               1,690	=1750*0.6+640
Delivery Person	$                  782	=230*3.4
Delivery Vehicle	$               1,074	=230*1.8+660
Equipment Depreciation	$                  424	424
Rent	$               1,930	1930
Misc Costs	$                  865	=1750*0.06+760
Total Expenses	$            20,960
Net Income	$            10,540

	Actual Results	Flexible Budget	Activity Variance
Income
Sales Revenue	$            32,080	$     31,500	$               580	F
Expenses
Pizza Ingredients	$               7,750	$       8,225	$             -475	F
Kitchen Staff	$               5,910	$       5,970	$               -60	F
Utilities	$                  900	$       1,690	$             -790	F
Delivery Person	$                  782	$           782	$                  -
Delivery Vehicle	$                  992	$       1,074	$               -82	F
Equipment Depreciation	$                  424	$           424	$                  -
Rent	$               1,930	$       1,930	$                  -
Misc Costs	$                  808	$           865	$               -57	F
Total Expenses	$            19,496	$     20,960	$         -1,464	F
Net Income	$            12,584	$     10,540	$           2,044	F

	Actual Results	Static Budget	Spending Variance
Income
Sales Revenue	$            32,080	$     29,700	$           2,380	F
Expenses
Pizza Ingredients	$               7,750	$       7,755	$                  -5	F
Kitchen Staff	$               5,910	$       5,970	$               -60	F
Utilities	$                  900	$       1,630	$             -730	F
Delivery Person	$                  782	$           850	$               -68	F
Delivery Vehicle	$                  992	$       1,110	$             -118	F
Equipment Depreciation	$                  424	$           424	$                  -
Rent	$               1,930	$       1,930	$                  -
Misc Costs	$                  808	$           859	$               -51	F
Total Expenses	$            19,496	$     20,528	$         -1,032	F
Net Income	$            12,584	$       9,172	$           3,412	F