1. (8 points) Pie Guys Pizzeria is owned and operated by three brothers. Data concerning the pizzerias monthly revenues and costs appear below (q refers to the number of pizzas served):

	Formula
Revenue	$17.15q
Cost of ingredients	$5.25q
Rent	$2,350
Utilities	$300 + $0.40q
Salaries	$5,190
Miscellaneous	$1,000 + $.55q

Actual results for February appear below. Prepare a flexible budget performance report for the pizzeria for February for 1,300 pizzas.

Revenue	$22,515
Cost of ingredients	7,050
Rent	2,350
Utilities	758
Salaries	5,280
Miscellaneous	1,655

Required:

Prepare a budget for 1,200 pizzas (this is the planning budget).

Prepare a budget for 1,300 pizzas (this is the flexible budget).

Compute the activity variances between the two budgets and revenue/spending variances between the actual data and the flexible budget. Also indicate whether the variance is favorable or unfavorable.

Actual Units	Actual Results	Revenue & Spending Variances	Flexible Budget	Activity Variances	Planning Budget
Revenue
Expenses:
Cost of ingredients
Rent
Utilities
Salaries
Miscellaneous
Total expenses
Net operating income