Question

Milano Pizza has a small area for in-store dining as well as offers take-out and free home delivery services. The pizzeria’s owner determined the shop has two major cost drivers—the number of pizzas sold and the number of deliveries made. The pizzeria’s cost formulas appear below: Fixed Cost per Month Cost per Pizza Cost per Delivery Pizza ingredients $ 4.60 Kitchen staff $ 5,950 Utilities $ 630 $ 0.50 Delivery person $ 3.30 Delivery vehicle $ 650 $ 1.70 Equipment depreciation $ 416 Rent $ 1,910 Miscellaneous $ 750 $ 0.25 In November, the pizzeria budgeted for 1,620 pizzas at an average selling price of $17 per pizza and for 240 deliveries. Data concerning the pizzeria’s actual results in November were as follows: Actual Results Pizzas 1,720 Deliveries 220 Revenue $ 29,810 Pizza ingredients $ 7,570 Kitchen staff $ 5,890 Utilities $ 895 Delivery person $ 726 Delivery vehicle $ 990 Equipment depreciation $ 416 Rent $ 1,910 Miscellaneous $ 802 Required: 1. Complete the flexible budget performance report for November. Note: 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.

Answer 1

To complete the flexible budget performance report for November, we need to calculate the actual and flexible budget amounts for each cost and revenue category and determine the variances. The flexible budget is based on the actual level of activity in November, which is 1,720 pizzas sold and 220 deliveries made.

Step-by-step explanation:

To complete the flexible budget performance report for November, we need to calculate the actual and flexible budget amounts for each cost and revenue category and determine the variances. The flexible budget is based on the actual level of activity in November, which is 1,720 pizzas sold and 220 deliveries made. Here is the flexible budget performance report:

CategoryActual AmountFlexible Budget AmountVariancesRevenue$29,810$29,340FPizza ingredients$7,570$6,888UKitchen staff$5,890$5,470FUtilities$895$1,080UDelivery person$726$726NoneDelivery vehicle$990$374FEquipment depreciation$416$416NoneRent$1,910$1,910NoneMiscellaneous$802$760F