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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 Cost per Cost per
per Month Pizza Delivery
Pizza ingredients $5.00
Kitchen staff $6,030
Utilities $670 $0.90
Delivery person $2.70
Delivery vehicle $690 $2.10
Equipment depreciation $448
Rent $1,990
Miscellaneous $790 $0.15
In November, the pizzeria budgeted for 1,740 pizzas at an average selling price of $13 per pizza and for 200 deliveries. Data concerning the pizzeria’s actual results in November appear below:
Actual Results
Pizzas 1,840
Deliveries 180
Revenue $24,530
Pizza ingredients 8,290
Kitchen staff $5,970
Utilities $915
Delivery person $486
Delivery vehicle $998
Equipment
depreciation $448
Rent $1,990
Miscellaneous $826
Required:
Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for the pizzeria for November.

Sagot :

Anthougoidn

Answer:

Milano Pizza

Flexible Budget Performance Report for November

                                            Static         Flexible    Actual          Variances

                                          Budget       Budget     Results  Spending  Activity                                                                                              

Sales Revenue               $22,620     $23,920  $24,530     $610 F  $1,300 F  

Pizza ingredients              $8,700       $9,200    $8,290     $910 F    $500 U  

Kitchen staff                       6,030        $6,030      5,970         60 F           0 N

Utilities                               2,236        $2,326          915       1,411 F        90 U

Delivery person                   540            $486         486            0 N        54 F

Delivery vehicle                  1,110          $1,068         998          70 F         42 F

Equipment depreciation     448            $448          448            0 N          0 N

Rent                                  1,990          $1,990       1,990            0 N          0 N

Miscellaneous                   1,051          $1,066         826       240 F          15 U

Total expenses           $22,105        $22,614  $19,923   $2,691 F    $509 U

Explanation:

a) Data and Calculations:

Pizzeria's Cost Formulas:

                                  Fixed Cost    Cost per     Cost per    Static  

                                  per Month        Pizza        Delivery   Budget

Pizza ingredients                               $5.00                         $8,700

Kitchen staff                  $6,030                                             6,030

Utilities                             $670         $0.90                          2,236

Delivery person                                                   $2.70           540

Delivery vehicle              $690                            $2.10           1,110

Equipment depreciation $448                                                448

Rent                              $1,990                                              1,990

Miscellaneous                $790             $0.15                         1,051

Budgeted pizzas for November = 1,740

Average selling price per pizza = $13

Average deliveries for the month = 200

Sales revenue = $23,920 (1,840 * $13)

Flexing the budget:

                                  Fixed Cost Cost per Cost per  Flexible

                                  per Month   Pizza     Delivery   Budget

Pizza ingredients                         ($5.00 * 1,840)          $9,200

Kitchen staff                  $6,030                                      6,030

Utilities                             $670   ($0.90 * 1,840)           2,326

Delivery person                                           $2.70*180     486

Delivery vehicle              $690                    $2.10*180   1,068

Equipment depreciation $448                                         448

Rent                              $1,990                                       1,990

Miscellaneous                $790    ($0.15*1,840)              1,066

Actual results in November:

Pizzas 1,840

Deliveries 180

Revenue $24,530

Pizza ingredients 8,290

Kitchen staff $5,970

Utilities $915

Delivery person $486

Delivery vehicle $998

Equipment  depreciation $448

Rent $1,990

Miscellaneous $826

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