Question

Puccini Pizza is a neighborhood pizzeria that has a small area for in-store dining. They also offer 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.

7 Puccini Pizza is a neighborhood pizzeria that has a small area for in-store dining. They also offer 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: $5.50 Fixed cost Cost per Cost per per month Delivery Pizza ingredients $3.80 Kitchen staff $5,200 Utilities $630 $0.05 Delivery person Delivery vehicle $540 $1.50 Equipment depreciation $275 Rent $1,830 Miscellaneous $820 $0.15 Total $9,295 In November, the pizzeria budgeted for 1,200 pizzas at an average selling price of $13.50 per pizza and for 180 deliveries. Data concerning the pizzeria's operations in November appear below: Pizzas Deliveries Actual Results 1,240 178 Revenue Costs Net operating income $ $ $ 17,420 14,785 2,635 AUAL What is the activity variance for net operating income in November? $1,396.00 Favorable $380.00 Favorable $1,790,00 Favorable $394.00 Favorable None of the above

Answer 1

Activity variance for net operating income = Master budget cost-Flexible budget cost

= (1200*13.50-1200*4+7*180)-(1240*13.50-1240*4+178*7)

Activity variance for net operating income = 394 F

So answer is d) $394 Favorable