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 $ 4.50 Kitchen staff $ 6,150 Utilities $ 730 $ 0.50 Delivery person $ 3.30 Delivery vehicle $ 750 $ 1.50 Equipment depreciation $ 496 Rent $ 2,110 Miscellaneous $ 850 $ 0.25 In November, the pizzeria budgeted for 1,920 pizzas at an average selling price of $19 per pizza and for 180 deliveries. Data concerning the pizzeria’s actual results in November appear below: Actual Results Pizzas 2,020 Deliveries 160 Revenue $ 39,050 Pizza ingredients $ 9,370 Kitchen staff $ 6,090 Utilities $ 945 Delivery person $ 528 Delivery vehicle $ 1,010 Equipment depreciation $ 496 Rent $ 2,110 Miscellaneous $ 862 Required: 1. Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for the pizzeria for November?

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	2020			2020			1920
Deliveries	160			160			180
Revenue	39050	670	F	38380	1900	F	36480
Expenses:
Pizza ingredients	9370	280	U	9090	450	U	8640
Kitchen staff	6090	60	F	6150	0	None	6150
Utilities	945	795	F	1740	50	U	1690
Delivery person	528	0	None	528	66	F	594
Delivery vehicle	1010	20	U	990	30	F	1020
Equipment depreciation	496	0	None	496	0	None	496
Rent	2110	0	None	2110	0	None	2110
Miscellaneous	862	493	F	1355	25	U	1330
Total expense	21411	1048	F	22459	429	U	22030
Net operating income	17639	1718	F	15921	1471	F	14450