Chapter, 9 , Problem 21 3z3e5

PROBLEM 9–21

Verona Pizza is a small neighborhood pizzeria that has a small area for in-store dining as well offering takeout and free home de The pizzeria's owner has determined that the shop has two major cost drivers—the number of pizzas sold and the number of de Data concerning the pizzeria's costs appear below:

In October, the pizzeria budgeted for 1,500 pizzas at an average selling price of $13.00 per pizza and for 200 deliveries. Data concerning the pizzeria's operations in October appear below:

Required:

1 Prepare a flexible budget performance report that shows both activity variances and revenue and spending variances for t 2 Explain the activity variances. Verona Pizza Flexible Budget Performance Report For the Month Ended October 31

Pizzas (q1) Deliveries (q2) Revenue ($13.00q1) Expenses: Pizza ingredients ($4.20q1) Kitchen staff ($5,870)

Planning Budget Activity Variances 1,500 200 $19,500 6,300 5,870

$1,300 420 0

Utilities ($590 + $0.10q1) Delivery person ($2.90q2) Delivery vehicle ($610 + $1.30q2) Equipment depreciation ($384) Rent ($1,790) Miscellaneous ($710 + $0.05q1) Less:Total expense Net operating income

740 580 870 384 1,790 785 17,319 $2,181

10 58 26 0 0 5 351 949

as well offering takeout and free home delivery services. mber of pizzas sold and the number of deliveries made.

0 per pizza and for 200 deliveries.

and revenue and spending variances for the pizzeria for October.

erformance Report nded October 31 Flexible Budget Spending Variances 1,600 180 $20,800 6,720 5,870

Actual Results 1,600 180

$540 130 60

$21,340 Given 6,850 Given 5,810 Given

750 522 844 384 1,790 790 17,670 $3,130

125 0 138 0 0 12 321 219

875 522 982 384 1,790 778 17,991 $3,349

Given Given Given Given Given Given