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 cost per Pizza Delivery $.4.10 $6,070 $ 690 $ 0.10 Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous I $2.90 $2.30 $ 710 $ 464 $2,30 $ 810 $ 0.05 In November, the pizzeria budgeted for 1,800 pizzas at an average selling price of $15 per pizza and for 220 deliveries.

Answer 1

Ans.	MILANO   PIZZA
	Flexible Budget Performance Report
	For the Month Ended November 30
		Actual Results	Revenue & Spending variance		Flexible budget	Volume variance		Planning Budget
	Pizzas	1,900			1,900			1,800
	Deliveries	200			200			220
	Revenue	$29,130	$630	F	$28,500	$1,500	F	$27,000
	Less: Expenses:
	Pizza ingredients	$8,650	$860	U	$7,790	$410	U	$7,380
	Kitchen staff	$6,010	$60	F	$6,070	$0	none	$6,070
	Utilities	$925	$45	U	$880	$10	U	$870
	Delivery person	$580	$0	none	$580	$58	F	$638
	Delivery vehicle	$1,002	$168	F	$1,170	$46	F	$1,216
	Equipment depreciation	$464	$0	none	$464	$0	none	$464
	Rent	$2,030	$0	none	$2,030	$0	none	$2,030
	Miscellaneous	$838	$67	F	$905	$5	U	$900
	Total expenses	$20,499	$610	U	$19,889	$321	U	$19,568
	Net operating income	$8,631	$20	F	$8,611	$1,179	F	$7,432
	*Calculations for Flexible budget & Planning budget:
			Flexible budget		Planning budget
	Pizzas		1,900		1,800
	Deliveries		200		220
	Revenue		1,900 * $15		1,800 * $15
	Less: Expenses:
	Pizza ingredients		1,900 * $4.10		1,800 * $4.10
	Kitchen staff		$6,070		$6,070
	Utilities		$690 + ($0.10 * 1,900)		$690 + ($0.10 * 1,800)
	Delivery person		200 * $2.90		220 * $2.90
	Delivery vehicle		$710 + (200 * $2.30)		$710 + (220 * $2.30)
	Equipment depreciation		$464		$464
	Rent		$2,030		$2,030
	Miscellaneous		$810 + ($0.05 * 1,900)		$810 + ($0.05 * 1,800)
	*Flexible budget is prepared on the basis of actual units.
	*Fixed expenses remain same as master budget.
	Revenue & Spending variance   =   Actual results - Flexible budget
	Activity variance =   Flexible budget - Planning budget
	*Increase in expenses & decrease in revenue or net income from flexible budget to actual results & Planning budget to flexible budget =   Unfavorable.
	*Decrease in expenses & increase in revenue or net income from flexible budget to actual results & Planning budget to flexible budget =   Favorable.