Question

7 Puccini Pizza is a neighborhood pizzeria that has a small area for in-store dining. They also offer 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 Cost per Cost per per month Pizza Delivery Pizza ingredients $3.80 Kitchen staff $5,200 Utilities $630 $0.05 Delivery person $5.50 Delivery vehicle $540 $1.50 Equipment depreciation $275 Rent $1,830 Miscellaneous $820 $0.15 Total $9,295 In November, the pizzeria budgeted for 1,200 pizzas at an average selling price of $13.50 per pizza and for 180 deliveries. Data concerning the pizzeria's operations in November appear below: Pizzas Deliveries Actual Results 1.240 178 Revenue Costs Net operating income $ $ $ 17,420 14,785 2,635 What is the activity variance for net operating income in November? $1,396.00 Favorable $380.00 Favorable $1,790.00 Favorable $394.00 Favorable None of the above

Answer 1

Answer- The activity variance  for net operating income in November is =$394 Favorable.

Explanation-

PUCCINI PIZZA
Activity Variance
For the month ended November
Particulars	Flexible Budget	Planning Budget	Variances	Remark
		$	$
Revenue	1240 pizzas*$13.50 per pizza=16740	1200 pizzas*$13.50 per pizza=16200	540	Favorable
Less:-Expenses
Pizza ingredients	1240 pizzas*$3.80 per pizza=4712	1200 pizzas*$3.80 per pizza=4560	-152	Unfavorable
Kitchen staff	5200	5200	0	None
Utilities	$630+(1240 pizzas*$0.05 per pizza)=692	$630+(1200 pizzas*$0.05 per pizza)=690	-2	Unfavorable
Delivery person	178 deliveries*$5.50 per delivery= 979	180 deliveries*$5.50 per delivery= 990	11	Favorable
Delivery vehicle	$540+(178 deliveries*$1.50 per delivery) =807	$540+(180 deliveries*$1.50 per delivery) =810	3	Favorable
Equipment	275	275	0	None
Rent	1830	1830	0	None
Miscellaneous	$820+(1240 pizzas*$0.15 per pizza)= 1006	$820+(1200 pizzas*$0.15 per pizza)= 1000	-6	Unfavorable
Total Expenses	15501	15355	-146	Unfavorable
Income from operations	1239	845	394	Favorable