Milano Pizza is a small neighborhood pizzeria that has a small area for in-More dining as well
Question:
Milano Pizza is a small neighborhood pizzeria that has a small area for in-More 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 | $1.50 | |
Equipment depreciation | $275 | ||
Rent | $1,830 | ||
Miscellaneous | $820 | $0.15 |
In November, the pizzeria budgeted for 1.200 pizzas at an average selling price of $13.50 per pizza and for 180 deliveries.
Data concerning the pizzeria's operations in November appear below:
Actual Results | |
---|---|
Pizzas | 1,240 |
Deliveries | 174 |
Revenue | $17,420 |
Pizza ingredients | $4,985 |
Kitchen staff | $5,281 |
Utilities | $984 |
Delivery person | $609 |
Delivery vehicle | $655 |
Equipment depreciation | $275 |
Rent | $1,830 |
Miscellaneous | $954 |
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.
Managerial Accounting
ISBN: 978-0077522940
15th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer