Question

Problem 9-21 (Algo) More Than One Cost Driver (LO9-2, LO 9-3, LO 9-4, LO9-5) 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 $4.70 $6,190 $ 750 $0.70 Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous $3.50 $1.70 $ 770 $ 512 $2,150 $ 870 $0.10

Answer 1

Answer

	Actual Results	Revenue & Spending Variance		Flexible Budget	Activity Variances		Planning Budget
Pizzas	2,080			2,080			1,980
Deliveries	180			180			200
Revenues	$                     27,730.00	$                                   690.00	Favourable	$                     27,040.00	$                                          1,300.00	Favourable	$                                                 25,740.00
Expenses:
Pizza Ingrediants	$                        9,730.00	$                                     46.00	Favourable	$                       9,776.00	$                                              470.00	Unfavourable	$                                                    9,306.00
kitchen Staff	$                        6,130.00	$                                     60.00	Favourable	$                       6,190.00	$                                                       -	None	$                                                    6,190.00
Utilities	$                           955.00	$                               1,251.00	Favourable	$                       2,206.00	$                                                70.00	Unfavourable	$                                                    2,136.00
Delivery Person	$                           630.00	$                                            -	None	$                           630.00	$                                                70.00	Favourable	$                                                       700.00
Delivery Vehicle	$                        1,014.00	$                                     62.00	Favourable	$                       1,076.00	$                                                34.00	Favourable	$                                                    1,110.00
Equipment Depreciation	$                           512.00	$                                            -	None	$                           512.00	$                                                       -	None	$                                                       512.00
Rent	$                        2,150.00	$                                            -	None	$                       2,150.00	$                                                       -	None	$                                                    2,150.00
Miscellaneous	$                           874.00	$                                   204.00	Favourable	$                       1,078.00	$                                                10.00	Unfavourable	$                                                    1,068.00
Total Expenses	$                     21,995.00	$                               1,623.00	Favourable	$                     23,618.00	$                                              446.00	Unfavourable	$                                                 23,172.00
Net Operating Income	$                        5,735.00	$                               2,313.00	Favourable	$                       3,422.00	$                                              854.00	Favourable	$                                                    2,568.00

--Working

	Actual Results	Flexible Budget	Planning Budget
Pizzas	2080	2080	1980
Deliveries	180	180	200
Revenues	27730	=2080*13	=1980*13
Expenses:
Pizza Ingrediants	9730	=2080*4.7	=1980*4.7
kitchen Staff	6130	6190	6190
Utilities	955	=750+(2080*0.7)	=750+(1980*0.7)
Delivery Person	630	=180*3.5	=200*3.5
Delivery Vehicle	1014	=770+(180*1.7)	=770+(200*1.7)
Equipment Depreciation	512	512	512
Rent	2150	2150	2150
Miscellaneous	874	=870+(2080*0.1)	=870+(1980*0.1)