Mario's Pizza has in-storedining as well as offering take-out and free home delivery services. Theowner has determined that the restaurant has two major cost drivers q1: the number ofpizzas sold and q2: the number of deliveries made. Budget and actual financial data are shown below:

Budget Data	Fixed Cost Per Month	Revenue & Variable Cost Per Pizza (q1)	Variable Cost Per Delivery (q2)
Revenue		$20
Pizza ingredients		$ 8
Kitchen staff	$6,000
Utilities	$ 600	$ 0.20
Delivery person			$5.00
Delivery vehicles	$ 1,500		$2.00
Equipment depreciation	$ 750
Rent	$1,800
Miscellaneous	$ 800	$ 0.30

In January, the pizzeria budgeted for 2,500 pizzas and for 1,150 deliveries.

	Actual Results
Number of pizzas sold	2,640
Number of deliveries	1,150
Revenue	$56,100
Actual Costs	Variable	Fixed
Pizza ingredients	$23,400
Kitchen staff		$6,500
Utilities	$ 620	$ 600
Delivery person	$6,200
Delivery vehicle	$2,500	$1,500
Equipment depreciation		$ 750
Rent		$1,900
Miscellaneous	$ 500	$ 850

Required:

1. Prepare flexible budget performance report using contribution format and including activity, revenue and total spending variances.
2. Explain the activity variance.