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 $ 4.90 Kitchen staff $ 6,010 Utilities $ 660 $ 0.80 Delivery person $ 2.60 Delivery vehicle $ 680 $ 2.00 Equipment depreciation $ 440 Rent $ 1,970 Miscellaneous $ 780 $ 0.10 In November, the pizzeria budgeted for 1,710 pizzas at an average selling price of $20 per pizza and for 190 deliveries. Data concerning the pizzeria’s actual results in November were as follows: Actual Results Pizzas 1,810 Deliveries 170 Revenue $ 36,800 Pizza ingredients $ 8,110 Kitchen staff $ 5,950 Utilities $ 910 Delivery person $ 442 Delivery vehicle $ 996 Equipment depreciation $ 440 Rent $ 1,970 Miscellaneous $ 820 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.)

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 5CE: Jean and Tom Perritz own and manage Happy Home Helpers, Inc. (HHH), a house-cleaning service. Each...

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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		$ 4.90
Kitchen staff	$ 6,010
Utilities	$ 660	$ 0.80
Delivery person			$ 2.60
Delivery vehicle	$ 680		$ 2.00
Equipment depreciation	$ 440
Rent	$ 1,970
Miscellaneous	$ 780	$ 0.10

In November, the pizzeria budgeted for 1,710 pizzas at an average selling price of $20 per pizza and for 190 deliveries.

Data concerning the pizzeria’s actual results in November were as follows:

	Actual Results
Pizzas	1,810
Deliveries	170
Revenue	$ 36,800
Pizza ingredients	$ 8,110
Kitchen staff	$ 5,950
Utilities	$ 910
Delivery person	$ 442
Delivery vehicle	$ 996
Equipment depreciation	$ 440
Rent	$ 1,970
Miscellaneous	$ 820

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.)

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