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: cost per Delivery Fixed Cost Cost per per Month Pizza $ 4.60 $5,950 $ 630 $ 0.50 Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous $3.30 $1.70 $ 650 $ 416 $1,910 $ 750 $ 0.25 In November, the pizzeria budgeted for 1,620 pizzas at an average selling price of $17 per pizza and for 240 deliveries.

Answer 1

Answer

	Actual Results	Revenue & Spending Variance		Flexible Budget	Activity Variances		Planning Budget
Pizzas	1,720			1,720			1,620
Deliveries	220			220			240
Revenues	$                     29,810.00	$                                   570.00	Favourable	$                     29,240.00	$                                          1,700.00	Favourable	$                                                 27,540.00
Expenses:
Pizza Ingrediants	$                        7,570.00	$                                   342.00	Favourable	$                       7,912.00	$                                              460.00	Unfavourable	$                                                    7,452.00
kitchen Staff	$                        5,890.00	$                                     60.00	Favourable	$                       5,950.00	$                                                       -	None	$                                                    5,950.00
Utilities	$                           895.00	$                                   595.00	Favourable	$                       1,490.00	$                                                50.00	Unfavourable	$                                                    1,440.00
Delivery Person	$                           726.00	$                                            -	None	$                           726.00	$                                                66.00	Favourable	$                                                       792.00
Delivery Vehicle	$                           990.00	$                                     34.00	Favourable	$                       1,024.00	$                                                34.00	Favourable	$                                                    1,058.00
Equipment Depreciation	$                           416.00	$                                            -	None	$                           416.00	$                                                       -	None	$                                                       416.00
Rent	$                        1,910.00	$                                            -	None	$                       1,910.00	$                                                       -	None	$                                                    1,910.00
Miscellaneous	$                           802.00	$                                   378.00	Favourable	$                       1,180.00	$                                                25.00	Unfavourable	$                                                    1,155.00
Total Expenses	$                     19,199.00	$                               1,409.00	Favourable	$                     20,608.00	$                                              435.00	Unfavourable	$                                                 20,173.00
Net Operating Income	$                     10,611.00	$                               1,979.00	Favourable	$                       8,632.00	$                                          1,265.00	Favourable	$                                                    7,367.00

--Working

	Actual Results	Flexible Budget	Planning Budget
Pizzas	1720	1720	1620
Deliveries	220	220	240
Revenues	29810	=1720*17	=1620*17
Expenses:
Pizza Ingrediants	7570	=1720*4.6	=1620*4.6
kitchen Staff	5890	5950	5950
Utilities	895	=630+(1720*0.5)	=630+(1620*0.5)
Delivery Person	726	=220*3.3	=240*3.3
Delivery Vehicle	990	=650+(220*1.7)	=650+(240*1.7)
Equipment Depreciation	416	416	416
Rent	1910	1910	1910
Miscellaneous	802	=750+(1720*0.25)	=750+(1620*0.25)