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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.
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 driversthe number of pizzas sold and the number of deliveries made. The pizzeria's cost formulas appear below: Fixed Cost Cost per Cost per per Month Pizza $ 4.30 Delivery $ 5,890 600 $ 0.20 Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous $3.00 $ 1.40 $ 620 $ 392 $ 1,850 $ 720 $ 0.10 In November, the pizzeria budgeted for 1,530 pizzas at an average selling price of $14 per pizza and for 210 deliveries. Data concerning the pizzeria's actual results in November appear below: Actual Results 1,630 190 Pizzas Deliveries Revenue Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous $ 23, 360 $ 7,030 $ 5, 830 $ 880 $ 570 $ 984 $ 392 1,850 $ 784 Required: 1. Compute the revenue and spending 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.) Milano Pizza Revenue and Spending Variances For the Month Ended November 30 Actual Revenue and Spending Results Variances 1,630 190 Flexible Budget Pizzas Deliveries CA 23,360 7,030 5,830 880 570 Revenue Expenses: Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous Total expense Net operating income 984 392 1,850 784 18,320 5,040 $
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