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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:
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 Cost per Cost per
per Month Pizza Delivery
Pizza ingredients $5.00
Kitchen staff $6,030
Utilities $670 $0.90
Delivery person $2.70
Delivery vehicle $690 $2.10
Equipment depreciation $448
Rent $1,990
Miscellaneous $790 $0.15
In November, the pizzeria budgeted for 1,740 pizzas at an average selling price of $13 per pizza and for 200 deliveries. Data concerning the pizzeria’s actual results in November appear below:
Actual Results
Pizzas 1,840
Deliveries 180
Revenue $24,530
Pizza ingredients 8,290
Kitchen staff $5,970
Utilities $915
Delivery person $486
Delivery vehicle $998
Equipment
depreciation $448
Rent $1,990
Miscellaneous $826
Required:
Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for the pizzeria for November.
Answer:Milano PizzaFlexible Budget Performance Report for NovemberStatic Flexible Actual VariancesBudget Budget Results Spending ActivitySales Revenue $22,620 $23,920 $24,530 $610 F $1,300 FPizza ingredients $8,700 $9,200 $8,290 $910 F $500 UKitchen staff 6,030 $6,030 5,970 60 F 0 NUtilities 2,236 $2,326 915 1,411 F 90 UDelivery person 540 $486 486 0 N 54 FDelivery vehicle 1,110 $1,068 998 70 F 42 FEquipment depreciation 448 $448 448 0 N 0 NRent 1,990 $1,990 1,990 0 N 0 NMiscellaneous 1,051 $1,066 826 240 F 15 UTotal expenses $22,105 $22,614 $19,923 $2,691 F $509 UExplanation:a) Data and Calculations:Pizzeria's Cost Formulas:Fixed Cost Cost per Cost per Staticper Month Pizza Delivery BudgetPizza ingredients $5.00 $8,700Kitchen staff $6,030 6,030Utilities $670 $0.90 2,236Delivery person $2.70 540Delivery vehicle $690 $2.10 ...