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: Fixed Cost Cost per Pizza $ 3.80 Cost per Delivery per Month Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent $ 5,220 630 $ 0.05 $ 3.50 $ 1.50 $ $ $ 1,830 $ 540 275 Miscellaneous 820 $ 0.15 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 actual results in November appear below Actual Results 1,240 Pizzas Deliveries Revenue 174 $ 17,420 4,985 5,281 984 Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous 609 655 $ 275 1,830 954 Required:

Answer 1

Milano Pizza
Flexible Budget Report
For the month ended November 30
		Actual results	Revenue and Spending Variances		Flexible Budget
Pizzas	x	1240			1240
Deliveries	y	174			174
Revenue	($13.50 * x)	$ 17,420	$    680	F	$ 16,740
Expenses:
Pizza ingredients	($3.80 * x)	$   4,985	$    273	U	$    4,712
Kitchen staff	$                    5,220	$   5,281	$      61	U	$    5,220
Utilities	[$630 + ($0.05 * x)]	$       984	$    292	U	$        692
Delivery Person	($3.50 * y)	$       609	$       -	None	$        609
Delivery Vehicle	[$540 + ($1.50 * y)]	$       655	$    146	F	$        801
Equipment depreciation	$                        275	$       275	$       -	None	$        275
Rent	$                    1,830	$   1,830	$       -	None	$    1,830
Miscellaneous	[$820 +( $0.15 * x)]	$       954	$      52	F	$    1,006
Total expense		$ 15,573	$    428	U	$ 15,145
Net operating income		$   1,847	$    252	F	$    1,595

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