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 $ 4.50 Cost per Delivery $6,370 $ 840 $ 0.60 Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous $3.40 $1.50 $ 860 $ 584 $2,330 $ 960 $ 0.10 In November, the pizzeria budgeted for 2,250 pizzas at an average selling price of $22 per pizza and for 210 deliveries. Data concerning the pizzeria's actual results in November appear below: Pizzas Deliveries Revenue Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous Actual Results 2,350 190 $ 52,480 $ 11,350 $ 6,310 $ 1,000 $ 646 $ 1,632 $ 584 $ 2,330 $ 928
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 $ 6,370 Utilities $ 840 $ 0.60 Delivery person $ 3.40 Delivery vehicle $ 860 $ 1.50 Equipment depreciation $ 584 Rent $ 2,330 Miscellaneous $ 960 $ 0.10 In November, the pizzeria budgeted for 2,250 pizzas at an average selling price of $22 per pizza and for 210 deliveries. Data concerning the pizzeria’s actual results in November appear below: Actual Results Pizzas 2,350 Deliveries 190 Revenue $ 52,480 Pizza ingredients $ 11,350 Kitchen staff $ 6,310 Utilities $ 1,000 Delivery person $ 646 Delivery vehicle $ 1,032 Equipment depreciation $ 584 Rent $ 2,330 Miscellaneous $ 928

Answer 1

Revenue and spending variance

	Actual results	Revenue and spending variance	Flexible budget
Pizzas	2350		2350
Deliveries	190		190
Revenue	52480	780 F	51700
Expenses
Pizza ingredients	11350	775 U	10575
Kitchen staff	6310	60 F	6370
Utilities	1000	1250 F	2250
Delivery person	646	0 None	646
Delivery vehicle	1032	113 F	1145
Equipment depreciation	584	0 None	584
Rent	2330	0 None	2330
Miscellaneous	1195	267 U	928
Total expense	24180	381 U	24828
Net income	28300	1428 F	26872