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 per Month Cost per Pizza Cost per Delivery Pizza ingredients $ 4.00 Kitchen staff $ 6,050 Utilities $ 680 $ 1.00 Delivery person $ 2.80 Delivery vehicle $ 700 $ 2.20 Equipment depreciation $ 456 Rent $ 2,010 Miscellaneous $ 800 $ 0.20 In November, the pizzeria budgeted for 1,770 pizzas at an average selling price of $14 per pizza and for 210 deliveries. Data concerning the pizzeria’s actual results in November appear below: Actual Results Pizzas 1,870 Deliveries 190 Revenue $ 26,800 Pizza ingredients $ 8,470 Kitchen staff $ 5,990 Utilities $ 920 Delivery person $ 532 Delivery vehicle $ 1,000 Equipment depreciation $ 456 Rent $ 2,010 Miscellaneous $ 832 Required: 1. Complete the flexible budget performance report that shows both revenue and spending variances and activity 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.)

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter9: Profit Planning And Flexible Budgets

Section: Chapter Questions

Problem 62E: Flexible Budget for Various Levels of Production Budgeted amounts for the year: Required: 1. Prepare...

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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:

	Fixed Cost per Month	Cost per Pizza	Cost per Delivery
Pizza ingredients				$	4.00
Kitchen staff	$	6,050
Utilities	$	680		$	1.00
Delivery person						$	2.80
Delivery vehicle	$	700				$	2.20
Equipment depreciation	$	456
Rent	$	2,010
Miscellaneous	$	800		$	0.20

In November, the pizzeria budgeted for 1,770 pizzas at an average selling price of $14 per pizza and for 210 deliveries.

Data concerning the pizzeria’s actual results in November appear below:

	Actual Results
Pizzas		1,870
Deliveries		190

Revenue	$	26,800
Pizza ingredients	$	8,470
Kitchen staff	$	5,990
Utilities	$	920
Delivery person	$	532
Delivery vehicle	$	1,000
Equipment depreciation	$	456
Rent	$	2,010
Miscellaneous	$	832

Required:

1. Complete the flexible budget performance report that shows both revenue and spending variances and activity 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.)

Flexible Budget Performance Report
For the Month Ended November 30
Actual
Results
Revenue and Spending
Variances
Flexible
Budget
Planning
Budget
Activity Variances
Pizzas
1,870
Deliveries
190
Revenue
$
26,800
Expenses:
This is a numeric cell, so please
enter numbers only.
Pizza ingredients
8,470
Kitchen staff
5,990
Utilities
920
Delivery person
532
Delivery vehicle
Equipment
depreciation
1,000
456
Rent
2,010
Miscellaneous
832
Total expense
20,210
Net operating income
$
6,590
%24

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