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. Data concerning the pizzeria€™s costs 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. 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 activityvariances.

Transcribed Image Text:

Cost per Delivery Fixed Cost Cost per Pizza $3.80 $0.05 per Month Pizza ingredients Kitchen staff Utilities.. $5,220 $630 $3.50 $1.50 Delivery vehicle Equipment depreciation $540 $275 $1,830 $820 $0.15 Miscellaneous