Problem 8-19A More Than One Cost Driver [LO8-2, LO8-3] Milano Pizza is a small n

Question

Problem 8-19A More Than One Cost Driver [LO8-2, LO8-3]

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. Data concerning the pizzeria’s costs appear below:

  

  

  

Compute the revenue and spending variances for the pizzeria for November. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

     

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. Data concerning the pizzeria’s costs appear below:

Explanation / Answer

Flexible Budget

1240 pizzas and 174 deliviries

Flexible Budget

1240 pizzas and 174 deliviries

Actual result Variance Revenue $16,740 $17,420 680(F) Expenses: Pizza ingredients    4,712    4,985 273(U) Kitchen staff    5,220    5,281 61(U) Utilities      692      984 292(U) Delivery person      609      609 0 Delivery Vechicle      801     655 146(F) Equipment depreciation     275     275 0 Rent 1830 1830 0 Miscellanous 1006    954 52 total expenses 15,145 15,573 428(U) Net income 1595 1847 252(F)

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