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 per Month			Cost per Pizza			Cost per Delivery
Pizza ingredients				$	4.30
Kitchen staff	$	5,890
Utilities	$	600		$	0.20
Delivery person							$	3.00
Delivery vehicle	$	620					$	1.40
Equipment depreciation	$	392
Rent	$	1,850
Miscellaneous	$	720		$	0.10

In November, the pizzeria budgeted for 1,530 pizzas at an average selling price of $14 per pizza and for 210 deliveries.

Data concerning the pizzeria’s actual results in November appear below:

  

	Actual Results
Pizzas		1,630
Deliveries		190
Revenue	$	23,360
Pizza ingredients	$	7,030
Kitchen staff	$	5,830
Utilities	$	880
Delivery person	$	570
Delivery vehicle	$	984
Equipment depreciation	$	392
Rent	$	1,850
Miscellaneous	$	784

Milano Pizza Flexible Budget Performance Report For the Month Ended November 30 Flexible Budget Actual Results Planning Budget Pizzas 1,630 Deliveries 190 Revenue $ 23,360 Expenses: Pizza ingredients Kitchen staff 7,030 5,830 F 0 None Utilities 880 570 0 None F Delivery person Delivery vehicle Equipment depreciation 984 U 392 0 None OOOOOOOOO 0 0 None None Rent 1.850 None Miscellaneous 784 U | ד Total expense Net operating income 18,320 5,040 | $ ד

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	1630			1630			1530
Deliveries	y	190			190			210
Revenue	($14 * x)	$     23,360	$       540	F	$   22,820	$      1,400	F	$       21,420
Expenses:
Pizza ingredients	($4.30 * x)	$       7,030	$         21	U	$      7,009	$         430	U	$         6,579
Kitchen staff	$                             5,890	$       5,830	$         60	F	$      5,890	$             -	None	$         5,890
Utilities	($600 + $0.20 * x)	$           880	$         46	F	$         926	$            20	U	$             906
Delivery Person	($3 * y)	$           570	$          -	None	$         570	$            60	F	$             630
Delivery Vehicle	($620 + $1.40 * y)	$           984	$         98	U	$         886	$            28	F	$             914
Equipment depreciation	$                                392	$           392	$          -	None	$         392	$             -	None	$             392
Rent	$                             1,850	$       1,850	$          -	None	$      1,850	$             -	None	$         1,850
Miscellaneous	($720+ $0.10 * x)	$           784	$         99	F	$         883	$            10	U	$             873
Total expense		$     18,320	$         86	F	$   18,406	$         372	U	$       18,034
Net operating income		$       5,040	$       626	F	$      4,414	$      1,028	F	$         3,386