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.

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:

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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 activity variances.