Concept explainers
More than One Cost Driver
Milano Pizza is a small neighborhood pizzeria that has a small area for in-store dining as 11 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 pizzerias cost formulas appear below:
In November, the pizzeria budgeted for 1.200 pizzas at an average selling price of $13.50 per pizza and for 180 deliveries.
Date concerning the pizzeria’s actual results in Noverber appear below:
Required:
1. Compute the revenue and spending variances for the pizzeria for November.
(Hint: Refer to Exhibit 9−6.)
2. Explain the revenue and spending variances.
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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 Costper Month Cost perPizza Cost perDelivery Pizza ingredients $ 4.40 Kitchen staff $ 5,910 Utilities $ 610 $ 0.30 Delivery person $ 3.10 Delivery vehicle $ 630 $ 1.50 Equipment depreciation $ 400 Rent $ 1,870 Miscellaneous $ 730 $ 0.15 In November, the pizzeria budgeted for 1,560 pizzas at an average selling price of $15 per pizza and for 220 deliveries. Data concerning the pizzeria’s actual results in November appear below: Actual Results Pizzas 1,660 Deliveries 200 Revenue $ 25,450 Pizza…arrow_forwardMilano 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 Costper Month Cost perPizza Cost perDelivery Pizza ingredients $ 4.60 Kitchen staff $ 6,170 Utilities $ 740 $ 0.60 Delivery person $ 3.40 Delivery vehicle $ 760 $ 1.60 Equipment depreciation $ 504 Rent $ 2,130 Miscellaneous $ 860 $ 0.20 In November, the pizzeria budgeted for 1,950 pizzas at an average selling price of $20 per pizza and for 190 deliveries. Data concerning the pizzeria’s actual results in November appear below: Actual Results Pizzas 2,050 Deliveries 170 Revenue $ 41,680 Pizza…arrow_forwardMilano 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: Fixed cost per month Cost per Pizza Cost per delivery Pizza ingredients . . . . . . . . . $3.80 Kitchen staff . . . . . . . . . . . . $5,220 Utilities . . . . . . . . . . . . . . . . $630 $0.05 Delivery person . . . . . . . . . . $3.50 Delivery vehicle . . . . . . . . . . $540…arrow_forward
- 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 Kitchen staff Utilities $ 4.80 $ 6,210 $ 760 $ 0.80 Delivery person Delivery vehicle Equipment depreciation $ 2.60 5 1.80 $ 780 $ 520 $ 2,170 $ 880 Rent Miscellaneous S 0.20 In November, the pizzeria budgeted for 2,010 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 Resulta Pizzas 2,110 Deliveries 190 Revenue $ 30,240 $ 9,910 $ 6,150 $ 960 Pizza ingredients Kitchen staft Utilities Delivery person Delivery vehicle Equí pment depreciation Rent $494 $ 1,016 $ 520 $ 2,170 $ 880…arrow_forwardLucerne pizza is a small neighborhood pizzeria that has a small area for in-store dining as well offering takeout 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: Fixed Cost per Month Cost per Pizza Cost per Delivery Pizza ingredients ................ $5.00 Kitchen staff ...................... $5,800 Utilities .............................. 520 $.10 Delivery person .................. $2.90 Delivery vehicle .................. 680 $2.10 Equipment depreciation ...... 387 Rent .................................. 1,730 Miscellaneous ..................... 730 $.01 In October, the pizzeria budgeted for 2,000 pizzas at an average selling price of $13.00 per pizza and for 190 deliveries. Data concerning the pizzeria’s…arrow_forwardMilano 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: Pizza ingredients Fixed Cost Cost per per Month Pizza $ 4.50 $ 5,930 Cost per Delivery Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous $ 620 $640 $ 408 $1,890 $740 $0.40 $ 3.20 $ 0.20 $ 1.60 In November, the pizzeria budgeted for 1,590 pizzas at an average selling price of $16 per pizza and for 230 deliveries. Data concerning the pizzeria's actual results in November appear below. Actual Results Pizzas Deliveries Revenue 1,690 210 Kitchen staff Delivery person $27,600 Pizza ingredients $ 7,390 $ 5,870 Utilities. $ 890 $ 672 $ 988 $ 408 $ 1,890 $ 796 Delivery vehicle Equipment depreciation Rent Miscellaneous…arrow_forward
- 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 Cost per per Month Pizza Delivery Pizza ingredients $ 4.20 $6,310 $ Kitchen staff Utilities 810 $ 0.30 Delivery person Delivery vehicle Equipment depreciation $3.10 $1.20 $ 830 560 Rent $ 2,270 Miscellaneous 930 $ 0.15 In November, the pizzeria budgeted for 2,160 pizzas at an average selling price of $19 per pizza and for 180 deliveries. Data concerning the pizzeria's actual results in November were as follows: Actual Results Pizzas 2,260 Deliveries 160 $ 43,690 $ 10,810 $4 Revenue Pizza ingredients Kitchen staff 6,250 $4 $ $ Utilities 985 Delivery person 496 Delivery vehicle Equipment depreciation 1,026 2$ $4 560 Rent 2,270 Miscellaneous…arrow_forwardMilano Pizza is a small neighborhood pizzeria that has a small area for in-store dining as well as offeringtake-out and free home delivery services. The pizzeria’s owner has determined that the shop has two majorcost drivers—the number of pizzas sold and the number of deliveries made. Data concerning the pizzeria’scosts appear below:Fixed Cost Cost per Cost perper Month Pizza DeliveryPizza ingredients ............... $3.80Kitchen staff ....................... $5,220Utilities ............................... $630 $0.05Delivery person .................. $3.50Delivery vehicle ................. $540 $1.50Equipment depreciation ..... $275Rent ................................... $1,830Miscellaneous .................... $820 $0.15In November, the pizzeria budgeted for 1,200 pizzas at an average selling price of $13.50 per pizzaand for 180 deliveries.Data concerning the pizzeria’s operations in November appear below:Actual ResultsPizzas ................................... 1,240Deliveries…arrow_forwardMilano 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 Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous 4 Pizzas Deliveries Revenue Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle. Equipment depreciation Rent Miscellaneous Pizzas Deliveries Revenue Expenses: Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent $ 6,250 $ 780 $ 0.10 In November, the pizzeria budgeted for 2,070 pizzas at an average selling price of $16 per pizza and for 230 deliveries. Data concerning the pizzeria's actual results in November were as follows: Miscellaneous Total expense…arrow_forward
- 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 Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle. Equipment depreciation Rent Miscellaneous Pizzas Deliveries Revenue Pizza ingredients. Excee Kitchen staff n+ili+ Utilities Delis Delivery person Delivery vehicle Equipment depreciation. Rent Miscellaneous $ 6,090 $ 700 Pizzas Deliveries Revenue Expenses: $ 720 $ 472 Pizza ingredients Kitchen staff $ 2,050 $ 820 In November, the pizzeria budgeted for 1,830 pizzas at an average selling price of $16 per pizza and for 230 deliveries. Data concerning the pizzeria's actual results in November were as follows: Actual Results 1,930 210 520 $ 31,520 930 $ 8,830 $ 6,030 $930…arrow_forwardMilano 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 Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous $ 6,210 $ 760 Pizzas Deliveries Revenue Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous $ 780 $ 520 $ 2,170 $ 880 Actual Results 2,110 190 $ 30,240 $ 9,910 $ 6,150 $ 960 $ 494 1,016 $ 520 $ 2,170 $ 880 Cost per Pizza $ 4.80 $ 0.80 $ $ 0.20 In November, the pizzeria budgeted for 2,010 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: cost per Delivery $ 2.60 $…arrow_forwardFollowing is relevant information for Snowdon Sandwich Shop, a small business that serves sandwiches: Total fixed cost per month $ 1,500 Variable cost per sandwich 2.50 Sales price per sandwich 5.25 During the month of June, Snowdon sold 600 sandwiches.Complete the contribution margin income statement for the month of June. Following is relevant information for Snowdon Sandwich Shop, a small business that serves sandwiches: Total fixed cost per month $ 1,500 Variable cost per sandwich 2.50 Sales price per sandwich 5.25 During the month of June, Snowdon sold 600 sandwiches.Complete the contribution margin income statement for the month of June. SNOWDON SANDWICH SHOP Contribution Margin Income Statement Month of June Contribution margin Net Operating incomearrow_forward
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