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	$	6,330
Utilities	$	820		$	0.40
Delivery person							$	3.20
Delivery vehicle	$	840					$	1.30
Equipment depreciation	$	568
Rent	$	2,290
Miscellaneous	$	940		$	0.20

  

In November, the pizzeria budgeted for 2,190 pizzas at an average selling price of $20 per pizza and for 190 deliveries.

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

  

	Actual Results
Pizzas		2,290
Deliveries		170
Revenue	$	46,560
Pizza ingredients	$	10,990
Kitchen staff	$	6,270
Utilities	$	990
Delivery person	$	544
Delivery vehicle	$	1,028
Equipment depreciation	$	568
Rent	$	2,290
Miscellaneous	$	916

Required:

1. Compute the revenue and spending variances for the pizzeria for November. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Answer 1

Answoro I. comperte - the Yexnue and spending variance - Revenue = (21240 x $amo) – $46,560) = 45,800 -46560 5760F Pizza ingredients = (4.30x2,290 ) - 10,990 = 9847 -10,990 = 11430 Kitchen staft - 6 270 - 6,330 60F utilities = (800+ Co.vox 3290))-990 --(820 +9167-990 = 1736 -990 = 746 F Delivery we hiele -(C170x .30 +840) – 1,028 = (281 +840). — 1, 0 =. 1061 – 1028 2.33F

Revenue 760 F Ezpene. 11430 GOF 746 F O None Pizza ingredients Kitchen stabb utilities Delivery person Delivery whicle Equipment Depreciation Rent 33 a None O None miscellaneous 482 F Total Expense las 938F *** ope vecinq.income. miscellaneous =(q40 + (0.80 x 2,190)7916 -(quo+458)~916. = 1398-916 = 482 F vo