Milano Pizza is a small neighborhood pizzeria that hasasmal area for in- store d

Question

Milano Pizza is a small neighborhood pizzeria that hasasmal area for in- store dining as well as offering take-out and free home delivery services The pizzeria's owner has determined thet the shop hes two major cost drivers-the number of pizzas sold and the number of deliveries made. Deta conceming the pizzeria's coets appear below Fbed Cost Cost per Cost per per Month Pizza Dellvery $3.80 $0.05 Ptzza Ingredients $630 $3.50 $1.50 Delivery person $275 $1,830 $820 Rent $o.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 conceming the pizzeria's operations in November appear below 1,240 174 $17.420 $4.985 $5.281 $984 Pzza ingredents.. Kitchen staff.... Delivery person Delivery vehicle $655 $275 $1,830 Miscellaneous Required: 1. Prepare a flexible budget performance report that shows both revenue and spending variances and activity variances for the pizzeria for November 2. Explain the activity variances

Explanation / Answer

Answer 1. Milano Pizza Flexible Budget Performance Report For the Month Ended Nov 30 Actual Results Revenue & Spending Variances Flexible Budget Activity Variances Planning Budget Pizzas Sold                       1,240                  1,240                    1,200 No. Of Deliveries                          174                      174                       180 Revenue - Sales revenue                    17,420                  680 F                16,740               540 F                 16,200 Less: Expenses: Pizza Ingredients                       4,985                  273 U                  4,712               152 U                    4,560 Kitchen Staff                       5,281                    61 U                  5,220                  -   U                    5,220 Utilities                          984                  292 U                      692                    2 U                       690 Delivery Person                          609                     -                        609                 21 F                       630 Delivery Vehicle                          655                  146 F                      801                    9 F                       810 Equipment Depreciation                          275                     -                        275                  -                         275 Rent                       1,830                     -                    1,830                  -                      1,830 Miscellaneous                          954                    52 F                  1,006                    6 U                    1,000 Total Expenses                    15,573                  428 U                15,145               130 U                 15,015 Opearting Income                       1,847                  252 F                  1,595               410 F                    1,185 Answer 2. The Income has incereased due to increase in the number of pizza sold and less number of deliveries. The Expenses of Pizza ,Utilities & Miscellaneous are unfavourable due to incrase in the number of pizzas sold. The cost of Delivery Person and Delivery vehicles are favourable dur to lesser number of pizzas delivered.

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