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. Data concerning the pizzeria's costs appear below: Fixed Cost per Month Cost per Pizza $ 4.50 Cost per Delivery $ 6,370 $ 840 $ 60 Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation $ 3.40 $ 1.50 $ 860 $ 584 $ 2,330 S 980 Rent Miscellaneous $ 10 In November, the pizzeria budgeted for 2.250 pizzas at an average selling price of S22 per pizza and for 210 deliveries. Data concerning the pizzeria's operations 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 $ 848 $ 1,032 $ 584 $ 2.330 $ 928 Required: 1. Complete the flexible budget performance report that shows both revenue and spending variances and activity 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.) Milano Pizza Flexible Budget Performance Report For the Month Ended November 30 Revenue and Spending Flexible Variances Budget Activity Variances Actual Results $ 52.480 Planning Budget Revenue Expenses: Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation 11,350 6.310 1.000 646 1,032 584 2,330 928 24.180 28,300 Rent Miscellaneous Total expense Net operating income $

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	2350			2350			2250
Nos of deliveries	190			190			210
Revenue	$52,480.00	$780.00	F	$51,700.00	$2,200.00	F	$49,500.00
Expenses:
Pizza Ingredients	$11,350.00	$775.00	U	$10,575.00	$450.00	U	$10,125.00
Kitchen Staff	$6,310.00	$60.00	F	$6,370.00	$0.00	None	$6,370.00
Utilities	$1,000.00	$1,250.00	F	$2,250.00	$60.00	U	$2,190.00
Delivery Person	$646.00	$0.00	None	$646.00	$68.00	F	$714.00
Delivery Vehicle	$1,032.00	$113.00	F	$1,145.00	$30.00	F	$1,175.00
Equipment Depreciation	$584.00	$0.00	None	$584.00	$0.00	None	$584.00
Rent	$2,330.00	$0.00	None	$2,330.00	$0.00	None	$2,330.00
Miscellenous	$928.00	$267.00	F	$1,195.00	$10.00	U	$1,185.00
Total Expenses	$24,180.00	$915.00	F	$25,095.00	$422.00	U	$24,673.00
Net Income	$28,300.00	$1,695.00	F	$26,605.00	$1,778.00	F	$24,827.00