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				$	4.20
Kitchen staff	$	6,310
Utilities	$	810		$	0.30
Delivery person							$	3.10
Delivery vehicle	$	830					$	1.20
Equipment depreciation	$	560
Rent	$	2,270
Miscellaneous	$	930		$	0.15

  

In November, the pizzeria budgeted for 2,160 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		2,260
Deliveries		160
Revenue	$	43,690
Pizza ingredients	$	10,810
Kitchen staff	$	6,250
Utilities	$	985
Delivery person	$	496
Delivery vehicle	$	1,026
Equipment depreciation	$	560
Rent	$	2,270
Miscellaneous	$	910

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

Solution:

Milano Pizza
Flexible Budget Performance Report
For the month ended November 30
Particulars	Actual results	Revenue and spending variances		Flexible Budget	Activity Variances		Planning Budget
Nos of Pizza	2260			2260			2160
Nos of deliveries	160			160			180
Revenue	$43,690.00	$750.00	F	$42,940.00	$1,900.00	F	$41,040.00
Expenses:
Pizza Ingredients	$10,810.00	$1,318.00	U	$9,492.00	$420.00	U	$9,072.00
Kitchen Staff	$6,250.00	$60.00	F	$6,310.00	$0.00	None	$6,310.00
Utilities	$985.00	$503.00	F	$1,488.00	$30.00	U	$1,458.00
Delivery Person	$496.00	$0.00	None	$496.00	$62.00	F	$558.00
Delivery Vehicle	$1,026.00	$4.00	U	$1,022.00	$24.00	F	$1,046.00
Equipment Depreciation	$560.00	$0.00	None	$560.00	$0.00	None	$560.00
Rent	$2,270.00	$0.00	None	$2,270.00	$0.00	None	$2,270.00
Miscellaneous	$910.00	$359.00	F	$1,269.00	$15.00	U	$1,254.00
Total Expenses	$23,307.00	$400.00	U	$22,907.00	$379.00	U	$22,528.00
Net Income	$20,383.00	$350.00	F	$20,033.00	$1,521.00	F	$18,512.00

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